Unregulated markets, whether on– or off-chain, can pose risks to buyers, sellers, investors, and consumers alike.
Crypto is currently facing a particularly acute reckoning due to its reputation for facilitating crimes such as money laundering, terrorism financing, and fraud.
Complying with laws that already exist can be difficult. Failure to do so has cost legitimate crypto innovators dearly. Ripple is still facing a lawsuit from the SEC, Binance was fined by the UK's FCA, and BitMEX had to settle a CFTC lawsuit for $100 million.
Compliance means following the rules and laws to prevent crimes and harms, protect customers and investors, and maintain fair markets. The fundamental principles of blockchain technology, transparency, trustlessness, and decentralization are not at odds with this. Quite the contrary: compliance is essential for mass adoption of blockchain technology and tokenization. Crypto cannot attract more users and innovators if it doesn't provide safe, open, and trustworthy services for legitimate purposes and ordinary users.
This is why Flowdesk strives for a cultural change within the industry that puts compliance first. Leading by example, setting a new standard not only for market making, but for all of crypto is a core mission of ours.
Such a change requires more, clearer regulation from legislators and fair enforcement from authorities.
But the blockchain community and crypto industry cannot sit back waiting for new rules to be set.
To build sustainable markets and business models driving mass adoption, projects, organizations, and companies need to comply proactively. They must start implementing the best practices of traditional sectors. This can marry the best in blockchain technology, transparency and access, with the institutional guarantees that exist in traditional industries, services, and finance. Only this way can crypto overcome the actual shortcomings of TradFi, its centralization, high fees, sluggishness, non-transparent relationships, and excessive control — as well as its own flaws.
To achieve this, there are several essential steps to take.
By taking these steps, companies and communities can ensure that they comply with regulations, maintain users' privacy and safety, and establish trust with their clients. Embracing this attitude is crucial to remake crypto so that it can make good on the original promises of blockchain technology.