London, UK — The cryptocurrency sector’s growth is phenomenal, and the industry is only expected to grow more. Multiple reports and surveys are suggesting that the cryptocurrency industry is here to stay and will only grow in the future. One of the most important aspects of the industry is its ability to offer a new level of financial inclusion. For many people around the world, the cryptocurrency industry is providing access to financial services that were previously unavailable.
Investments Global Broker Nicholas Banski said, “The cryptocurrency industry’s financial inclusion is one of its most important aspects. For many people around the world, the cryptocurrency industry is providing access to financial services that were previously unavailable.” He continued, “The industry is also helping to drive innovation in the payments space. The possibilities for what can be done with blockchain technology are endless, and we’re only just beginning to scratch the surface.”
The industry is becoming more regulated which will help to further legitimize it in the eyes of both institutional and retail investors. Crypto and money laundering regulations are being put in place by governments all over the world. The “know your customer” and anti-money laundering compliance requirements are being adopted by cryptocurrency exchanges. These developments will help to increase trust in the industry and attract more mainstream investors.
As Lithuania attempts to combat the dangers of money laundering and Russian elites circumventing financial sanctions, the country is preparing to tighten its monitoring of digital assets. The Ministry of Finance has announced that several government departments have approved legal changes to combat money laundering (AML) and the financing of terrorism in the cryptocurrency sector, according to news sources. The new rules, if they are passed by the Seimas of Lithuania, would finalize the criteria for user identification and prohibit anonymous accounts.
Banski said, “Money laundering is a very serious issue and we believe that currently, the industry is not doing enough to self-regulate in order to prevent it. We think that the government should step in and help create an environment where only legitimate businesses can operate.”
He further said, “Lithuania’s proposed laws come in as several other countries/states have also been stepping up their efforts to regulate digital assets. In 2018, the European Union (EU) adopted the Fifth Anti-Money Laundering Directive (5AMLD), which requires the member states to implement stricter measures to prevent the use of cryptocurrencies for money laundering and terrorist financing. I think we will see more countries following Lithuania’s lead and introducing similar regulations in the near future.”
The new legislation will also tighten the criteria for exchange operators beginning January 1, 2023. They will also be required to establish a nominal capital of 125,000 euros and register a corporate body with that amount. Furthermore, the Lithuania-based executives of the entities must be permanent residents.
The permanent resident condition is applied so that the local law enforcement would have an easier time investigating potential crimes, as well as ensuring compliance with the new anti-money laundering rules. Banski said, “I think that the government’s decision to require exchange operators to be based in Lithuania is a good one. It will make it easier for them to monitor and enforce the new regulations.”
Furthermore, the authorities also explain why such strict laws are necessary with the rapid expansion of the cryptocurrency industry and global geopolitical dangers. It emphasized the need for more sophisticated oversight of crypto-service providers in light of worldwide regulatory trends and geopolitical circumstances in the region when many Western nations impose financial and other penalties on Russia and Belarus. This shows that the country is not only thinking about its internal financial stability but also taking into account the potential consequences of international activity.
The Minister of Finance, Gintarė Skaistė said that these measures have been taken on a pan-European level in line with future pan-European rules.
The cryptocurrency industry is growing rapidly all over the world. In order to ensure its legitimacy and attract more mainstream investors, it is important for the industry to self-regulate and put in place measures to combat money laundering. Lithuania is one of the first countries to take such steps and it is likely that we will see more countries following suit in the near future.
Banski said, “I think that the government’s decision to require exchange operators to be based in Lithuania is a good one. It will make it easier for them to monitor and enforce the new regulations.” He further emphasized, “Money laundering needs to be taken seriously by all businesses, especially those operating in the crypto space. We believe that these new rules will help create a more transparent and safe environment for everyone involved. With that said, we also need to remember that this is just the first step and more needs to be done in order to fully protect users and prevent illicit activity.”
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