THE REGULATORY ADVANTAGE: TURNING COMPLIANCE INTO MARKET DOMINANCE IN THE DIGITAL ASSET SECTOR
As the market evolves, traders are increasingly realising that working with businesses firmly aligned with regulatory frameworks does not just provide a substantial advantage, but paves the way for leadership within the sector.
Major banks and financial institutions (FIs) increasingly favour payment providers with comprehensive regulatory credentials. This preference stems from the rigorous operational standards these institutions require – standards that closely parallel existing regulatory frameworks.
Their caution is well-founded – the complexity of operating across multiple jurisdictions demands providers that can navigate varied regulatory landscapes while maintaining consistent standards. Those that succeed in meeting these requirements often emerge as preferred partners for institutional clients, which themselves must demonstrate robust vendor management to their regulators. However, the current global regulatory environment for cryptocurrencies is fragmented, with approaches varying across jurisdictions.
In the US, the Securities and Exchange Commission (SEC) has adopted an assertive stance, primarily through enforcement actions aimed at curbing fraud and ensuring compliance. This case by case approach has resulted in pushback both from the industry and the government, prompting calls for clearer guidelines.
The European Union (EU), on the other hand, is on the cusp of introducing new cryptocurrency legislation, having published its Markets in Crypto-Assets Regulation (MiCA) in June 2023. MiCA became applicable to issuers of asset reference tokens and e-money tokens on 30 June 2024 and will become applicable to cryptoasset service providers on 30 December 2024.
Meanwhile, countries like Singapore and the United Arab Emirates are cultivating reputations as crypto-friendly hubs with progressive yet protective regulatory stances, enhancing their crypto payments platform and payment rails.
Jan-Mar 2025 Issue
Orbital