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Hindsight is 20/20: Crypto Regulations & The Future of Compliance

Crypto regulations have taken the industry on quite the ride, full of ups and downs, twists and turns, and leaving most of us in anticipation of what might be next. What we are able to see is the imminent expansion of cryptocurrency and its impending impact on compliance. Despite what some may think, regulation isn’t proposing the end of these decentralized platforms. In fact, its adoption will increase its usage through increased clarity and transparency.

As regulations continue to evolve and change before we ultimately see concrete implementations globally, companies need to buckle down, starting with a serious examination of their compliance software, processes, and teams. While some are prepared, there’s still a need to check the temperature of the industry as a whole.

Making the Necessary Adjustments

Nailing down what crypto regulations may look like when all is said and done is difficult.

And as the industry waits for more clarity, companies are approaching crypto in a variety of ways. From Star’s 2022 Crypto & Compliance Survey, only 37% of those surveyed have put an employee crypto-trading policy in place. When asked if there were plans to put one in place in 2022, 69% of respondents said no—simply because they are waiting for official regulatory guidance and policies.

If your organization is looking to get ahead of regulation and preemptively adopt an employee crypto-trading policy, the best first step is to understand the volume of crypto-trading within your employee base, which will likely inform the creation of your policy. Looking internally at ways to bolster your compliance processes, encouraging more communication with your monitored employees, and staying close to changes within the regulatory space will mitigate missteps and prepare even more effectively for final regulation as it comes.

Creating company policies and finding new compliance software resources will also help ensure you’re ready for regulatory implementation. Firms must be nimble and ready in the most practical sense for the framework that is emerging. With over 130 actions taken against the crypto world as of early June 2023, companies, like FTX, have experienced scrutiny on a global level and according to Frost & Sullivan’s recent article, it shows a clear weak spot – internal governance procedures.

What’s Around the Bend?

It’s become a rather repetitive statement that firms need to up their compliance game to meet the coming crypto regulatory framework in order to stay compliant and competitive. But a vital part of knowing what needs to be done is knowing where the industry currently stands.

In the 2022 survey, most firms believed that crypto regulations would come into effect in the next 12-24 months. While regulations may not be entirely in place, we can confidently say they are taking shape when you consider the MAS stablecoin regulatory framework, MiCA in the EU, and the SEC’s aggressive pursuit of the crypto industry in the US.

To support firms in their preparation for crypto regulations, it’s important to know where they stand on the future of compliance and the current steps they may or may not be taking to prepare their teams. StarCompliance is currently in the process of collecting feedback for its 3rd Annual Crypto and Compliance survey, and all firms are welcome to participate. To provide your perspective, you can complete the 5-minute survey here.

With the end of 2023 just around the corner, we hope to glean insights that will help our clients and the industry prepare for what’s to come and benchmark themselves against their peers as we all continue to navigate the ever-ambiguous crypto industry.