Crypto-assets have become the proverbial double-edged sword among financial experts. The rise and deployment of crypto-assets has pushed digital transformation and has the potential to make payments and transfers more efficient.
However, the speed and reach of such transactions — together with the potential for anonymous activity and for transactions without financial intermediaries — also make crypto-assets vulnerable to misuse and raise the risk of money laundering. Financial services firms, regulators and policymakers are all having to come to terms with the rise of a new class of product as well.
To look further at this evolving dynamic, the Thomson Reuters Institute and Thomson Reuters Regulatory Intelligence have created a new , which examines some of these developments as well as the risks and benefits of this next iteration of digital transformation.
The report also considers the problems arising from the lack of an internationally consistent definition of the term crypto, and the implications for financial services firms and their customers of a possible “arms race” among central banks as they seek to deploy their own digital currencies.
Further, the report notes the emergence of bitcoin as a mainstream financial instrument and assesses how that status has changed the risk profile in regard to money laundering and other misuse of cryptocurrencies for illicit or illegal activities. Indeed, cyber-risk is a concern for all cryptos, and the report looks at how firms, regulators, and exchanges can enhance their cyber-resilience.
In addition to the full report, a compendium that provides an overview of the regulatory landscape for cryptocurrencies and a global heat map (above) that displays the regulatory environment around the world are included and provide valuable information about the legality, tax treatment, and evolving regulatory framework on a country-by-country basis for more than 60 jurisdictions. A version of this compendium was first published by Thomson Reuters in October 2017.
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias. Thomson Reuters Institute is owned by Thomson Reuters.