Markets
KYC and AML in MiCA rules: how will crypto evolve in 2025?
Disclosure: The views and opinions expressed herein belong solely to the author and do not represent the views and opinions of crypto.news editorial.
All talk is about the EU Cryptoasset markets, or even MiCA, MiCA and MiCA. This regulatory package, which is not even fully in force yet, is already causing a monumental movement in the blockchain and crypto space. When will it be fully enforceable, what exactly is subject to regulation, and most importantly, how can we prepare for upcoming legislative changes and stay compliant in the brave new world of regulated crypto?
First, when? In June 2024, the European Securities and Markets Authority, in collaboration with the European Banking Authority, will prepare draft delegated acts. At the same time, part of the MiCA regulations will become fully applicable. These parts of the package cover asset-referenced tokens, which include all real-world asset tokenization tokens, as well as stablecoins backed by fiat currencies, because the assets they are referenced to are real currencies. When this happens, all entities involved in commercial operations using asset-referenced tokens will be forced to introduce numerous regulatory measures, such as KYC and AML protocols. The remainder of the regulations will become applicable in December 2024 or January 2025. Regulated entities will include:
- Crypto Asset Service Providers (CASP). Any company that provides services such as exchange services, portfolio management or crypto asset custody will be considered a PSAP. They will be required to incorporate KYC measures when onboarding new users, as well as AML programs that will flag suspicious transactions. One issue we should mention is that many challenges will also be considered PSAPs. MiCA will not apply to the so-called “fully decentralized challenge,” meaning no person or organization actually makes a profit from this endeavor, like Bitcoin. However, “partially centralized challenges” will be considered PSAPs.
- Asset Referenced Tokens transmitters. These companies are already regulated by MiCA rules and must also introduce KYC and AML measures.
The obvious answer is, of course, to introduce KYC and AML measures to remain compliant in the European crypto market. However, this process presents many obstacles, especially for crypto companies.
Developing KYC and AML protocols in-house takes months, if not years, and will cost the company millions of dollars. The biggest banks in the world spend up to $500 million per year on KYC alone, with an average of $50 million. Most crypto companies that already have KYC do so through different KYC providers. Like any other B2B business, a KYC provider does the entire process for you, saving the customer resources and not spending them on a completely new business process. The current market situation shows us that working with a KYC provider is the best solution in terms of optimization. Even the biggest names in the industry, like Binance, Bybit, and Huobi, all use the KYC provider’s services instead of managing them in-house.
Another obstacle specific to the cryptocurrency market is data security. Many people have come to the crypto market because of its built-in anonymity features and lack of KYC. Not necessarily because they finance terrorism or launder money, but simply because they believe in data ownership and don’t want to give away information as sensitive as their home address or ID number to a company third party. It will not be easy to explain the benefits of MiCA rules and KYC/AML practices to this specific audience. So this is a big challenge that crypto companies will have to overcome in order to keep users once the regulations come into full force.
But what are the real benefits of the MiCA rules? Why are they introduced? Is it just because the government wants to control us even more?
I strongly believe that the MiCA rules will have a very positive effect on the European crypto market, allowing it to be competitive with other regions that are actively introducing crypto regulations and allowing it to become the global crypto hub .
First of all, MiCA will replace the current regulations of individual EU countries. Germany, Italy, Spain, France and other countries all have different regulations, with different travel rules, minimum transaction sizes without KYC and many other differences. This leads companies to dedicate additional resources to adapt their KYC and AML processes separately to each legislation. For example, Binance had to leave the Netherlands market due to the inability to obtain the necessary license. With the new MiCA rules covering the entire EU, cases like this will not happen again, since companies will have to comply with a unified standard, making operations in the European crypto market much easier easy and less expensive.
Another important thing to note is that MiCA prohibits things that are obviously dangerous and economically unstable. One of the biggest regulatory changes is the complete ban on algorithmic stablecoins. Simply put, there are two types of stablecoins: currency-backed and algorithmic. Currency-backed stablecoins guarantee their stable price by locking up funds in a 1:1 ratio. In other words, if there is 1,000,000 USDT in the market, Tether will have 1,000,000 USD stuck somewhere, promising to buy back all of that currency with the blocked funds.
Algorithmic stablecoins, on the other hand, use market principles of supply and demand to maintain the target price. If the issuer notices that the stablecoin is losing value, it buys back part of the supply with other tokens. At a high enough scale, the collateral tokens used to redeem stablecoins from the market will also begin to lose value, or the company will burn the collateral tokens, ultimately leading to the company’s inability to withdraw enough stable coins from the market. and both tokens collapse. This is exactly what happened to UST and MOON, the price of the latter having fallen by 99.99%. Algorithmic stablecoins don’t work, and by banning them completely, MiCA regulations better protect investor funds.
Many people in the crypto space are less optimistic about upcoming regulations, and they are right. The implementation of KYC and AML protocols will definitely increase the operating costs of crypto companies and ultimately it will be the users who pay for it. Hiring a KYC provider, storing all the data, and many other additional processes will be expensive, forcing businesses to either cut costs elsewhere or increase their fees and commissions.
Another point to mention is security concerns. If you don’t have user data, it won’t be hacked or leaked. Many users are concerned about their privacy, saying that even traditional financial organizations that have used KYC for decades still fall victim to hacks.
I believe these issues, while very serious, will be mitigated and resolved as the crypto market matures and processes are improved and tested. Fair and clear regulations are obviously the future of the crypto market, and 2025 will be incredibly challenging and interesting for all crypto users.
Alexandre Ray
Alexandre Ray is the CEO and co-founder of Albus Protocol, a regulatory-compliant challenge framework for public blockchains, and JFactory, a Swiss company specializing in the development of decentralized financial technologies. Alexander is a technology executive and entrepreneur with over 20 years of experience developing infrastructure, cloud and data-driven solutions for European businesses. Working for companies such as Deutsche Bank Frankfurt and General Electric as a software architect and development manager, Alexander has been involved in the design and development of models for forecasting regulatory risks and financial figures, giving him insight deeper insight into algorithms and challenge instruments from an ancient financial perspective. .
Over the past 24 hours, Jupiter and JasmyCoin emerged as the top gainers among the top 100 crypto assets, while Bittensor and Mantra plunged as the top losers.
Top Winners
Jupiter
Jupiter (JUP) led the charge among the biggest gainers on July 27.
At the time of writing, the crypto asset had surged 12.6% in the past 24 hours and was trading at $1.16. JUP’s daily trading volume was hovering around $282 million, according to data from crypto.news.
JUP Hourly Price Chart, July 26-27 | Source: crypto.news
Additionally, the cryptocurrency’s market cap stood at $1.56 billion, making it the 62nd largest crypto asset, according to CoinGecko. Despite the recent price surge, the token is still down 42.6% from its all-time high of $2 reached on Jan. 31.
Jupiter functions as a decentralized exchange aggregator that allows users to trade Solana-based tokens. The platform also offers users the best routes for direct trades between multiple exchanges and liquidity pools.
In addition to being a DEX aggregator, Jupiter has expanded into a “full stack ecosystem” by launching several new projects, including a dedicated pool to support perpetual trading and plans for a stablecoin.
JasmyCoin
JasmyCoin (JASMI) has increased by 12% in the last 24 hours and is trading at $0.0328 at press time. JASMY’s daily trading volume has increased by 10% in the last 24 hours, reaching $146 million.
JASMY Hourly Price Chart, July 26-27 | Source: crypto.news
The asset’s market cap has surpassed the $1.5 billion mark, making it the 60th largest cryptocurrency at the time of reporting. However, the self-proclaimed “Bitcoin of Japan” is still down 99.3% from its all-time high of $4.79 on February 16, 2021.
JASMY is the native token of Jasmy Corporation, a Japanese Internet of Things provider. The platform seeks to merge the decentralization of blockchain technology with IoT, allowing users to convert their digital information into digital assets.
The initiative was launched by Kunitake Ando, former COO of Sony Corporation, along with Kazumasa Sato, former CEO of Sony Style.com Japan Inc., Hiroshi Harada, executive financial analyst at KPMG, and other senior executives from Japan.
Kaspa
Kaspa (KAS) saw a 100% increase in trading volume and an 8% increase in price over the past 24 hours, trading at $0.19 at the time of publication.
KAS Hourly Price Chart, July 26-27 | Source: crypto.news
According to data from CoinGecko, Kaspa now ranks 27th in the global cryptocurrency list, with a circulating supply of approximately 24.29 billion KAS tokens and a market capitalization of $4.59 billion.
Kaspa is a cryptocurrency designed to deliver a high-performance, scalable, and secure blockchain platform. Its unique Layer-1 protocol includes the GhostDAG protocol, a proof-of-work (PoW) consensus mechanism that enables faster block times and higher transaction throughput compared to standard blockchains.
Unlike Bitcoin, GhostDAG allows multiple blocks to be created simultaneously, speeding up transactions and increasing block rewards for miners.
Bonk
Bonk (BONK) is the only one coin meme which made it to this list of biggest gainers and jumped 8.6% in the last 24 hours. Trading at $0.000030, the Solana-based meme coin’s market cap has surpassed $2.1 billion, surpassing Floki (FLOKI), another competing dog-themed coin with a market cap of $1.78 billion.
BONK Hourly Price Chart, July 26-27 | Source: crypto.news
BONK’s daily trading volume hovered around $285 million. However, BONK is still down 33.5% from its all-time high of $0.000045, reached on March 4.
Bonk, a meme coin that rose to prominence in 2023, has contributed significantly to Solana’s value increase amid the meme coin frenzy.
Bonk started out as a simple dog-themed coin. It has since expanded its features to include integration with decentralized finance. The project also partners with cross-chain communication protocols, NFT marketplaces, and various other cryptocurrency ecosystems.
BONK trading pairs are now listed on major exchanges including Binance, Coinbase, OKX, and Bitstamp.
The big losers
Bittensor
Bittensor (TAO) was the biggest loser among the 100 largest crypto assets, according to data from CoinGecko.
At the time of writing, TAO, the native token of decentralized AI project Bittensor, was down 5%, trading around $344. The crypto asset had a daily trading volume of $59 million and a market cap of $2.43 billion.
TAO 24 Hour Price Chart | Source: CoinGecko
Bittensor, created in 2019 by AI researchers Ala Shaabana and Jacob Steeves, initially operated as a parachain on Polkadot before transitioning to its own layer-1 blockchain in March 2023.
Mantra
Mantra (OM) fell 6%, trading at $1.13 at press time. The digital currency’s market cap fell to $938 million. Additionally, the 82nd largest crypto asset has a daily trading volume of $26 million.
OM Price Hourly Chart, July 26-27 | Source: crypto.news
Mantra is a modular blockchain network comprising two chains, Manta Pacific and Manta Atlantic, specialized in zero-knowledge applications.
Coat
Coat (MNT) also saw a 2.4% drop in price, now trading at $0.8413. Currently, Mantle has a market cap of around $2.75 billion, which ranks 36th in the global cryptocurrency rankings by market cap, according to price data from crypto.news.
MNT Hourly Price Chart, July 26-27 | Source: crypto.news
Over the past 24 hours, MNT trading volume also fell by 6%, reaching $240 million.
Mantle, formerly known as BitDAO, is an investment DAO closely associated with Bybit. The MNT token is essential for governance, paying gas fees on the Mantle network, and staking on various platforms.
Built on the Ethereum network, Mantle provides a platform for decentralized application developers to launch their projects. It has become particularly popular for GameFi applications, leading to the formation of an internal Web3 gaming team.
Markets
Bitcoin Price Drops to $67,000 Despite Trump’s Pro-Crypto Comments, Further Correction Ahead?
Pioneer cryptocurrency Bitcoin has registered a 1.13% decline in the past 24 hours to trade at $67,400. Despite a strong pro-crypto stance from US presidential candidate Donald Trump at the Bitcoin 2024 conference, this massive selloff has raised concerns in the market about the asset’s sustainability at a higher price. However, given the recent three-week rally, a slight pullback this weekend is justifiable and necessary to regain the depleted bullish momentum.
Bitcoin Price Flag Formation Hints at Opportunity to Break Beyond $80,000
The medium-term trend Bitcoin Price remains a sideways trend amidst the formation of a bullish flag pattern. This chart pattern is defined by two descending lines that are currently shaping the price trajectory by providing dynamic resistance and support.
On July 5, BTC saw a bullish reversal from the flag pattern at $53,485, increasing its asset by 29.75% to a high of $69,400. This recent spike followed the market’s positive sentiment towards the Donald Trump speech at the Bitcoin 2024 conference in Nashville on Saturday afternoon.
Bitcoin Price | Tradingview
In his speech, Trump outlined several pro-crypto initiatives: he promised to replace SEC Chairman Gary Gensler on his first day in office, to establish a Strategic National Reserve of Bitcoin if elected, to ensure that the U.S. government holds all of its assets. Bitcoin assets and block any attempt to create a central bank digital currency (CBDC) during his presidency.
He also claimed that under his leadership, Bitcoin and cryptocurrencies will skyrocket like never before.
Despite Donald Trump’s optimistic promises, the BTC price failed to reach $70,000 and is currently trading at $67,400. As a result, Bitcoin’s market cap has dipped slightly to hover at $1.335 trillion.
However, this pullback is justified, as Bitcoin price has recently seen significant growth over the past three weeks, which has significantly improved market sentiment. Thus, price action over the weekend could replenish the depleted bullish momentum, potentially strengthening an attempt to break out from the flag pattern at $70,130.
A successful breakout will signal the continuation of the uptrend and extend the Bitcoin price forecast target at $78,000, followed by $84,000.
On the other hand, if the supply pressure on the upper trendline persists, the asset price could trigger further corrections for a few weeks or months.
Technical indicator:
- Pivot levels: The traditional pivot indicator suggests that the price pullback could see immediate support at $64,400, followed by a correction floor at $56,700.
- Moving average convergence-divergence: A bullish crossover state between the MACD (blue) and the signal (orange) ensure that the recovery dynamics are intact.
Related Articles
Frequently Asked Questions
A CBDC is a digital form of fiat currency issued and regulated by a country’s central bank. It aims to provide a digital alternative to traditional banknotes.
The proposal for a strategic national Bitcoin reserve is a major confirmation of Bitcoin’s legitimacy and potential as a reserve asset. Such a move could position Bitcoin in a similar way to gold, potentially stabilizing its price and encouraging other countries to adopt similar strategies.
Conferences like Bitcoin 2024 serve as essential platforms for networking, knowledge sharing, and showcasing new technologies within the cryptocurrency industry.
Markets
Swiss crypto bank Sygnum reports profitability after surge in first-half trading volumes – DL News
- Sygnum says it has reached profitability after increasing transaction volumes.
- The Swiss crypto bank does not disclose specific profit figures.
Sygnum, a Swiss global crypto banking group with approximately $4.5 billion in client assets, announced that it has achieved profitability after a strong first half, with key metrics showing year-to-date growth.
The company said in a Press release Compared to the same period last year, cryptocurrency spot trading volumes doubled, cryptocurrency derivatives trading increased by 500%, and lending volumes increased by 360%. The exact figures for the first half of the year were not disclosed.
Sygnum said its staking service has also grown, with the percentage of Ethereum staked by customers increasing to 42%. For institutional clients, staking Ethereum has a benefit that goes beyond the limitations of the ETF framework, which excludes staking returns, Sygnum noted.
“The approval and launch of Bitcoin and Ethereum ETFs was a turning point for the crypto industry this year, leading to a major increase in demand for trusted, regulated exposure to digital assets,” said Martin Burgherr, Chief Client Officer of Sygnum.
He added: “This is also reflected in Sygnum’s own growth, with our core business segments recording significant year-to-date growth in the first half of the year.”
Sygnum, which has also been licensed in Luxembourg since 2022, plans to expand into European and Asian markets, the statement said.
Markets
Former White House official Anthony Scaramucci says cryptocurrency bull market could be sparked by regulatory clarity
Anthony Scaramucci, founder of Skybridge Capital, says the next cryptocurrency bull market could be sparked by a new wave of clear cryptocurrency regulations.
In a new interview On CNBC’s Squawk Box, the former White House communications director said he and two other prominent industry figures traveled to Washington, D.C. to speak to officials about the dangers of Sen. Elizabeth Warren and U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler’s hardline approach to cryptocurrency regulation.
“Mark Cuban, myself, and Michael Novogratz were in Washington a few weeks ago to speak with White House officials and explain the dangers of Gary Gensler and Elizabeth Warren’s anti-crypto approach. I hope that message gets through…
“Overall, if we can get regulatory policy around Bitcoin and crypto assets in sync, we will have a bull market next year for these assets.”
Scaramucci then compares crypto assets to ride-hailing company Uber, saying regulators were initially wary of the service but eventually decided to adopt clear guidelines due to public demand.
“Remember Uber: Nobody wanted Uber. A lot of regulators didn’t want it. Mayors and deputy mayors didn’t want it, but citizens wanted Uber and eventually accepted the idea of regulating it fairly. I think we’re there now.”
The CEO also says young Democratic voters believe their leaders are making the wrong choices when it comes to digital assets.
“I think President Trump’s move toward Bitcoin and crypto assets has shaken Democrats to their core, and I think very smart, younger Democrats are recognizing that they are completely off base with their positions, completely off base with these SEC lawsuits and regulation by law enforcement, and now they need to get back to the center.”
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