Crypto trading is not what it used to be. In 2019, trader screening and passport requirements are the norm rather than the exception. Despite the presence of decentralized exchanges, and the recent decision of Poloniex to reintroduce email-only registrations, in 2019 the overall drive was for stricter regulations.
Here are the top 5 changes and restrictions for 2019.
OTC Trading Requiring KYC: LocalBitcoins is no longer a pseudonymous platform. From November onward, the firm complied with the regulations of Finland, and froze accounts that did not go through a KYC procedure. Using LOCALBITCOINS has been replaced by similar services, though in the end, regulations may affect all OTC markets.
Blockchain Analysis: Although still incomplete, regulators are preparing to track blockchains themselves. Currently, blockchain analysis remains a sporadic exercise, in 2020, there may be a requirement for more detailed tracking. CipherTrace is preparing its tools to track both coins and tokens, with the idea that the origin of crypto funds will be just as important as the origins of fiat.
Cracking Down on Coin Mixing: Especially in Europe, coin mixing is highly discouraged. Recent reports also saw BINANCE scrutinizing accounts that seemingly tried to mix coins after withdrawal. This year, Dutch authorities also seized the Bestmixer site. Coin mixing is still performed, but the activity may face further regulatory backlash, and should be approached with caution.
Skepticism Against “Stablecoins”: This hawkish regulatory stance stemmed from Facebook’s attempt to launch a fiat-backed asset, Libra. From then onward, multiple central banks and financial ministers warned against the launch of “stablecoins”. The chief argument was they could lead to artificial dollarization of smaller economies, and make money-laundering easier.
Stricter Tax Filing: The US IRS boosted its requirements for reporting crypto trades, requiring reporting of exchange operations, as well as coins received in a hard fork. US traders and owners should keep a record of their transactions, and report capital gains made on the sale of digital coins and tokens. Most crypto reporting is still a gray area when it comes to taxes, but tax authorities are waking up to the realities of crypto coins and their potential gains.
Crackdown on ICOs: The US Securities and Exchange Commission is becoming even stricter about unregistered tokens. Most ICOs launched after December 2017 have received a warning they could be counted as unregistered securities. The actions of the SEC range from fines to cease-and-desist orders, as well as outright token freezes. The SEC has been harsher toward projects that collected cash and targeted naive investors, though crypto-only projects like EOS that only EOS gathered Ethereum (ETH) received a relatively large fine.
