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UK Blockchain & Cryptocurrency Regulations in 2021

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Regulators around the globe are reconsidering the blockchain & cryptocurrency regulations as this technology faces growth in multiple industries. 

Over the last couple of years, an obscure technology, blockchain, formerly related to virtual money has gained global acclaim. No longer recognized Bitcoin, it is now extended to practically every business. Regulators around the globe are reconsidering the scope of KYC and AML regulations due to the large adoption of this technology in multiple industries.

Currently, there is no uniformity in global crypto and blockchain regulations. While blockchain has played a significant role in society, it persists as a comparatively nascent technology, having survived for shorter than ten years. This brief history has created pressure when the technology has been extended in fields traditionally subjected to comprehensive regulation, such as capital-raising and money transmission.

UK Cryptocurrency and Blockchain Regulation

The United Kingdom’s strategy to cryptocurrency laws is evolving but currently, there is no particular legalization. Cryptocurrencies are not regarded as authorized tender and transfers have certification specifications. HM Revenue and Customs (HMRC) has declared a brief on the tax strategy of cryptocurrencies, declaring that their “unique identity” implies they can’t be associated with traditional expenses or installments, and their “taxability” depends on the actions and individuals involved. Profits on cryptocurrencies are subject to monetary gains tax.

Cryptocurrency exchanges in the United Kingdom usually need to enroll with the Financial Conduct Authority (FCA) although some crypto companies may be responsible to acquire an e-license, instead. Although it doesn’t offer unique procurements for transfers, the FCA administration emphasizes that businesses involved in crypto-related actions that fall under subsisting monetary laws for derivatives require verification of actions. This is why it is recommended that crypto businesses should adopt Know Your Customer to make secure and seamless transactions.

Though it is essential to remark that despite an assigned cryptocurrency is not a specified investment other than electronic funds. Specific activities in association with such cryptocurrencies can yet be subjected to UK financial regulation. Indeed, such derivatives are also subject to recommended FCA limitations on their trade, purchasing, and distribution to retail clients. Furthermore, money transmission laws and anti-money laundering legislation may also be applied to activities carried out in connection to unregulated cryptocurrencies.

With a blockchain, the credit transaction and relevant records could be digitally engaged and distributed electronically at closing, thus providing the deal sessions, including data about loan forms, automatically to populate on the system ledger. The corresponding ledger obtained by all bankers. A blockchain platform for an associated loan could also attempt a loan’s credit rate, credit, and capital installment terms, and any other data fields related to the growth period of the loan. A blockchain platform could significantly decrease the time spent on synchronizing data over the market.

UK AML Requirements

AML requirements are generally included in the money laundering, terrorist financing, and transfer of funds. The MLRs perform the Fourth EU Money Laundering Directive in the United Kingdom and implement several obligations on companies that are within their extent, including the obligation to conduct a business level AML risk assessment. The MLRs are implemented on businesses that have been recognized as the most vulnerable to being utilized for money laundering or terrorist financing. Generally expressing, this indicates that providers of merchandise and services associated with unregulated cryptocurrencies are not directly subjected to the MLRs implemented.

It All Narrows Down To…

Cryptocurrency is likely to be a broadly used means of transactions in the future. However, the increasing number of fraudulent actions, such as money laundering and terrorist financing is becoming a barrier. To fight these violations, FATF has implemented regulations on all digital currency transactions. The latest directive is more strict when it occurs to financial crimes in cryptocurrencies. The fines have developed and KYC/AML checks should be more robust. Hence, Anti Money Laundering screening is necessary for crypto businesses.

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Author: Edward Grey

Edward is a cryptocurrency pioneer, writing as an author on different platforms including Medium and Thrive Global. He always likes to write on cryptocurrency which is a growing global market.



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Binance Coin (BNB) hits a new all-time high one day before its token burn

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Over the past 6 months, Binance Coin (BNB) has been quietly rallying higher, gaining 189% during this period and notching a new all-time high at $46.90 on Jan. 18. This price peak happened just one day before its quarterly token burn, leading investors to question whether or not BNB price will move higher once the event concludes. 

A token burn is a permanent removal of coins from circulation and this deflationary technique is a common practice used by many projects in the crypto sector. As Cointelegraph reported, the process does not destroy the coins but rather renders them unusable.

Aside from the supply change, Binance Chain recently launched smart contract capabilities which allow Decentralized Finance (DeFi) applications and cross-chain asset swaps to join. The exchange has also been wildly profitable since launch so al of these factors provide good reason for BNB’s appreciation.

BNB/USDT price (Binance). Source: TradingView

When Binance Futures rolled out, the exchange announced that futures platform revenue would be included in its BNB quarterly burn. These coins taken out of circulation will reflect a percentage of Binance’s earnings for the latest quarter of 2020.

Despite being the absolute market leader on futures contracts, the ever-growing exchange launched this service fairly recently. Over the 16 months since inception, the platform has grown to a $4 billion open interest. This number surpasses more established derivatives exchanges like OKEx, Huobi and BitMEX.

Initially, Binance stated that it would repurchase the coins slated for destruction, but this policy changed in February 2019. Thus, the actual token burn process involves reducing the potential supply until it reaches the 100 billion goal.

The latest BNB burning round occurred on Oct. 16, 2020, and it involved a total of 2.25 million BNB. Although its reported supply stands at 142.41 million, Messari calculates a 108.35 million liquid supply. This difference comes from coins currently restricted or vested, meaning they are not actually being traded.

Binance Chain’s evolution

After launching staking and validation services in September 2020, Binance Smart Chain quickly started gaining traction. The network adds Ethereum compatible smart contracts capacity to the original Binance Chain.

Shortly after launching, a host of decentralized applications started to emerge, totaling 60 projects and 600,000 unique smart chain addresses. Furthermore, 3 million BNB have been staked by network validators.

To date, cross-chain assets to Binance Chain have surpassed $250 million, and a $100 million accelerator fund was created to attract decentralized finance applications.

Binance Launchpad is also another positive factor that supports BNB’s value. The platform hosts Binance’s Initial Exchange Offering (IEO) and in 2020 six successful token sales occurred.

BNB Twitter user activity vs. market capitalization (USD). Source: TheTie

Data from TheTie, an alternative social analytics platform, shows that the recent price spike was accompanied by a sharp increase in Twitter user activity. Although this is not a fundamental factor, data shows that the more attention a token gets on social media, the easier it becomes to gather additional buying pressure.

Many investors believe that token burns positively impact price as the supply is constricted and this supposedly incentivizes investors to hold their tokens rather than market sell them at each top.

Interestingly, the latest burn had little to no impact on BNB price. This situation could indicate that the market is evolving to price in these events ahead of the announcement date.

On the other hand, investors may have perceived a non-circulating token burn as a non-event. Therefore, those recently buying BNB with the expectation of a post-burn pump may be sorely disappointed.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.