• Cryptocurrency compliance will build trust, authority, and credibility among common people.
• There are several challenges facing the government while trying to regulate crypto.  

Crypto compliance refers to the rules and regulations that companies, institutions, and organizations must follow. These are sets of rules and regulations designed to protect common people from crime, fraud, and money laundering schemes. 

Mostly, every country has its own rules and regulations for cryptocurrency. Regulations related to taxation, fraud, disputes, and other similar necessary regulations It is widely known that rules and regulations are necessary for social cohesion. But in the case of crypto, there are several other benefits as well. Let’s find out! 

Why Is There A Need For Crypto Compliance? 

Crypto is decentralized with the advantages of self-regulation but the other side of the same story is that in cases of illegal activity, no one is responsible. Somewhere, this makes crypto risky and illegal as well. Here are a few advantages of crypto compliance: 

• Market Credibility 

Defined rules and regulations maintain the reputation and build the trust of the people. 

• Long-term Sustainability 

Compliance works as a pillar of trust, accountability, and responsibility. Therefore, people tend to invest in long-term sustainability.  

• Global Expansion 

Proper compliance opens opportunities for global expansion. The odds of uncertainty are reduced, thus attracting a more loyal customer base. 

Challenges In Crypto Compliance 

The government is still in a dilemma as to how to control such a huge industry that isn’t controlled by a single body. There are several undefined areas in the crypto world. Here are some of the challenges in the industry:

• Crypto Categorization 

One of the major challenges in the crypto world is that organizations are still unable to categorize. Crypto can be termed a capital asset, and organizations need an entirely new category. 

As of now, most crypto is generally termed a ‘digital asset,’ but rules and regulations are still unclear. The US government defined the term ‘Commodity Exchange Act,’ which regulates cryptocurrencies like Bitcoin and Ethereum. 

• Consumer Protection Law 

Crypto exchanges and transactions are entirely based on peer-to-peer trust. There are no rules and regulations that control consumer disputes. In cases of refunds or fraud, there is no specific social code that protects consumers. 

Additionally, data theft and financial fraud go unnoticed. As the popularity of crypto increases, so do fraud and illegal activities. This is another issue crypto regulators are facing. 

• Crypto-Driven Illegal Activities 

As crypto-related illegal activities rise, the need for regulation is simultaneously increasing. Laws govern cases of fraud, wrong transactions, someone needing a refund, someone cheating, or any other similar situation. 

Right now, no regulation regulates these activities. The victim suffers and has no legal authority with which they can complain. Well-defined laws will ultimately build consumers’ trust. 

Conclusion 

Crypto is known for its decentralized nature; that is, there is a central body to regulate. But as cryptocurrency becomes more popular, the need for rules and regulations is also rising. 

Moreover, crypto is a billion-dollar industry. The government is losing millions due to improper taxation. To control illegal activities, fraud and wrongdoing, rules are becoming necessary.