There are hundreds of governments around the world, each making independent decisions about how to handle digital currencies and the economies that they facilitate. There are of course a handful of countries that have to deal with a much larger share of the issue and that other countries look to for precedent. Here are some of the trends we expect to see this year in those larger, precedent-setting nations:
Increased Scrutiny of Terror-Related Financing.
The attacks in Paris last year were not the first instances of so-called “homegrown terrorism”, but they did direct a spotlight on that issue as the most high profile attacks to-date. Authorities will be making a hard press to find these groups, trace their overseas connections, and shut down their financing.
There is no way to know if this will result in any legislation or ordinances that influence the Bitcoin community, or more broadly, the cryptocurrency community. It is unlikely that small changes would do very much to impede terrorists, and lawmakers have an uphill battle to fight to shut down digital currencies altogether. It is possible that they may look for ways to monitor activity more closely as a compromise.
Continuing Regulatory Trends.
The primary focus of regulation has always been at the juncture between currencies – be that Bitcoin and centralized currencies, or even between digital currencies. Companies that operate in that space are the closest to traditional businesses and existing financial laws. This has made them an easier (and perhaps more appropriate) target for regulators.
These money service businesses have had to comply with anti-money laundering laws and that scrutiny is likely to increase this year. In particular, these businesses should be diligent in filing suspicious activity reports to be sure they are not made the target of a Financial Crimes Enforcement Network investigation.
Improved Relations With Law Enforcement.
The mainstream media typically paints Bitcoin as a fringe community that is driven by those who want to skirt the law. We, of course, know better. And the Bitcoin community has made efforts to make sure that is clear to law enforcement agencies as well.
Last year, the “Blockchain Alliance” was formed, which is a public-private forum designed to combat criminal activity in Bitcoin and blockchain. This forum operates in both directions. On the one hand, experts from the cryptocurrency space work to educate law enforcement and assist them in their efforts. On the other, it is a platform through which law enforcement can express their priorities and motivations, many of which are as misunderstood as the Bitcoin community is.
Many large companies, particularly in the financial sector, have taken a serious interest in blockchain technology. We understand why – it is a powerful platform that can reduce the friction in transactions and create authentic transparency. However, with mainstream adoption of blockchain will come more regulatory interest.
This year, we anticipate that regulators will take a hard look at the many applications of blockchain and make decisions about how it can and should be used. As always, we will be advocating for a hands-off approach and that decision makers are educated before they act.
Bitcoin is poised to take large strides this year, and not just in standard metrics like adoption and value. We think that Bitcoin is on track to legitimize itself in new circles – the corporate world, perhaps. And more than anything, we would like to see the currency garner more understanding and respect from law enforcement and regulators around the world.