Cryptocurrency is the new mode of digital transaction that has gained popularity within the financial sectors of all business enterprises. It provides the users easy accessibility and hassle- free transaction benefits.
Cryptocurrency transactions are possible outside the purview of national borders. It allows the users to maintain anonymity while carrying out transactions. The monetary restrictions imposed by a country do not apply when using cryptocurrencies for their transactions. It facilitates smooth and easy transactions in all parts of the globe. There is no higher institution maintaining authority over these transactions.
However, this kind of benefit also allows scope for criminal activities to take place. There certain regulations are maintained iver cryptocurrencies to ensure safety of the users and the business enterprises involved.
Regulation features of Cryptocurrency:
In the United States, transactions taking place via cryptocurrencies are legal. It falls under the BSA or Bank Secrecy Act. It regulates certain features of its transaction processes.
It entails a number of rules that the cryptocurrencies must follow to ensure safe and secured transactions for the parties involved.
- Registration under FinCen- cryptocurrencies are regulated by FinCen through the Currency and Financial Transactions Reporting Act of 1970. Financial Crime Enforcement Network belongs to the bureau of The United States Department of the Treasury. The main objective of this body is to regulate all kinds of financial transactions that take place so that domestic and international terrorist activities, cases of money laundering, and fraud can be avoided.
- AML/CFT program- Anti-Money Laundering and Combating of Financing of Terrorism (CFT) programs are implemented to ensure safe financial transactions through cryptocurrencies. Reports show that $2.8 billion in 2019 alone was laundered by criminals. Various efforts and initiatives taken to prevent money laundering come under Anti- Money Laundering programs.
- Maintaining Records- Records retention is very important when it comes to cryptocurrencies. Investigators and other crime branches often request access to these records because it facilitates tracing of criminal activities that might have taken place. Records of Customer ID, customer information, transaction amount, date of transaction and other relevant documents must be presented and retained for 5 years at least.
- Regular submission of the data and reports- Retention of data and submitting reports on transactions also allow companies to maintain transparency on their end. It also ensures security and safety of their clients and investors.
These are some of the regulations that are imposed on cryptocurrencies to avoid illegal or criminal activities taking place under its purview.
New cryptocurrencies are born almost every hour and it gets easily out of control of any authorial body because of its focus on user anonymity. However, some regulations ensure safety of all parties involved and secure their financial exchange.