Fresh Crypto Ban? Don’t believe the hype.
By: Mark Hope, Chief Compliance Officer, FINXFLO
Regulations can be difficult to navigate; they are not always clear or concise and can leave you treading in the grey. In fact, many regulations do not provide a definitive answer as to whether certain business is permitted, or if it’s even regulated in the first place.
In days gone by, the absence of a clear regulatory prohibition was widely accepted as a green light to proceed, safe in the knowledge that you could continue business without having to worry about being given a hefty fine and a few years in the clink to contemplate your wrongdoing.
Fast forward to the present, and the old order of blissful ignorance provides little in the way of comfort. In today’s financial markets, the more prudent players among us will only conduct business if the rules say that they can, in addition to not saying that they can’t. In short, the absence of a prohibition is only valid if accompanied by express permission.
In current popular vernacular, some prominent authorities have recently banned some prominent crypto exchanges from conducting business in their jurisdictions; however, a quick peek under the hood helps to dispel some of the sensationalism that has been doing the rounds on social media.
What many are saying is a new and outright ban on crypto, is simply those jurisdictions reiterating what’s always been there; that you need a license to conduct regulated activity and/or deal in regulated products within their borders.
As we’ve seen with recent SEC action against Ripple, many authorities around the world feel that some tokens, such as XRP, exhibit the properties of equity or debt instruments, making them a regulated product in just about any jurisdiction where it’s possible to cash a cheque. Moreover, most countries require you to have a license to conduct derivatives business too, irrespective of whether the underlying asset is unregulated.
In conclusion, securities and derivatives are regulated products, and dealing in regulated products is a regulated activity. Therefore, it is reasonable to expect that if you are conducting regulated activity in a regulated product without the corresponding license, then at some point somebody sensible is going to ask you to stop, and that is precisely what’s happened here.
So, does that mean that the gloves are off, and we can all go nuts wherever we like because spot-deliverable crypto remains unregulated? Not precisely, no, because although many jurisdictions still don’t prohibit the offering of crypto products, they don’t necessarily allow it either, leaving us stuck in one of those murky grey areas that we discussed earlier.
As time progresses, however, more countries are going the way of Japan and Singapore, and bringing crypto under their existing licensing regimes, so it continues to become increasingly important to keep on top of the rules in every country in which we intend to conduct business.
FINXFLO has invested heavily in a world-class Compliance team to make sure we adhere to the strictest global regulatory standards, placing consumer protection and good conduct at the heart of our business, ensuring a safe and secure trading environment for all our users.
Co-founded by leaders in their respective niches, FINXFLO is a platform that focuses on changing the cryptocurrency market through innovation. As the world’s first hybrid DeFi/CeFi liquidity and protocol aggregator, FINXFLO brings a one-stop solution for all cryptocurrency traders and investors. Using only one account with one KYC, our users are now able to utilise liquidity from 25+ CeFi and DeFi platforms through a single user interface. In simple terms, FINXFLO blends all the upsides of DeFi and CeFi ecosystems to produce the ultimate product.