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Regulation remains one of the biggest barriers to entry for companies wishing to develop and launch their own cryptocurrency-related solutions.
Whether these tools are platforms for consumers to buy cryptocurrency or accept bitcoin in Accounts Receivable (AR) services, it can be difficult to embrace the myriad use cases of the digital currency given the compliance requirements required by these business models.
Additionally, these requirements have also created additional hurdles for these companies to be banked, with financial institutions (FIs) reluctant to provide services to crypto companies due to these compliance risks.
Speaking to PYMNTS, Zeeshan Feroz, Director of Growth at MoonPay, explained that lowering barriers to entry for companies interested in crypto business models must go beyond providing infrastructure. to support the buying, selling and storing of digital currencies. Taking a compliance-centric approach to serving these businesses and supporting their growth through banking, results in a more holistic offering that can help the cryptocurrency ecosystem proliferate in a compliant manner.
An infrastructure box
Navigating the complex and often changing regulatory requirements of cryptocurrency mining is not only a challenge, but can also be an expensive endeavor, especially for a startup with an interesting use case for crypto in head.
“The challenge that any crypto company faces today is that often they have an idea that they would like to build something, be it an ecosystem or a protocol, whatever it is,” said Feroz. “But before you can build this, there is a lead needed to apply for the necessary licenses.”
As with most entrepreneurs, regulatory compliance may not be their area of expertise. MoonPay stepped in to fill this gap with its out-of-the-box infrastructure, providing these businesses with fiat-to-crypto entry and exit ramps that facilitate the business model, while prioritizing compliance through support. of these regulatory licenses, Know Your Customer (KYC) and more.
The company recently moved to address another key compliance challenge for companies in this industry. An investment in the BCB group will connect banking services to business customers, who Feroz says are traditionally “very underserved”.
With crypto often seen as a high-risk industry and the technology regulatory landscape still at an early stage of rapid evolution, traditional FIs may understandably be wary of banking firms operating in the space. The BCB Group offers the services of its network of banking partners, connecting businesses to their services on a unified platform.
Drive use cases
Lowering barriers to entry into the crypto arena has the potential to promote an ongoing shift in mindset to legitimize and destigmatize digital currencies. Despite the technology’s earlier reputation as a tool to facilitate malicious activity and black market commerce, Feroz noted that industry solution providers are keen to help businesses follow the rules.
“I think what a lot of us in the industry are trying to do is create an environment in which businesses operate in a manner that is fully compliant with all applicable laws,” he said. .
Already, there is growing evidence that crypto is losing its notoriety. Feroz highlighted the proliferation of central bank digital currencies (CBDCs) as a key example of how governments are increasingly willing to experiment with technology for a variety of use cases, including cross-border and B2B payments. . Non-fungible tokens, better known as NFT, are another exciting application that Feroz says represents the opportunity for crypto to transform concepts like the ownership and portability of digital and, eventually, physical assets.
One of the most dramatic signs that cryptocurrencies are taking on new meaning for corporate finance and treasury professionals in particular is the value of holding crypto on the books. Treasurers are now looking to bitcoin and other cryptocurrencies to protect against perceived inflation resulting from the U.S. government’s money printing initiatives amid the pandemic.
“It’s interesting that an asset that was traditionally quite volatile has, in some cases, now been seen as a hedge against inflation,” Feroz said, adding that only a few years ago this development didn’t wouldn’t have been something he could have imagined happening so early in crypto history.
With the B2B, B2C, and government use cases of the expansion of crypto, more companies with creative business models and technology use cases may see less resistance to their ideas. With the right technology partners in place that support the infrastructure and compliance necessary to bring these ideas to life, crypto companies can give even more momentum to the spread of crypto.
“We’re in a pretty exciting time for crypto. There have been a lot of big milestones that space has taken,” Feroz said. “And I’m not talking about price, I’m talking about perception and utility.”
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NEW DATA PYMNTS: AI IN FOCUS: THE BANK’S TECHNOLOGY ROADMAP
About the Study: The AI In Focus: The Bank Technology Roadmap is a research and interview report examining how banks are using artificial intelligence and other advanced IT systems to improve risk management credit and other aspects of their operations. The Playbook is based on a survey of 100 bank executives and is part of a larger series assessing the potential of AIs in finance, healthcare and others.
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