#Ep. 12: How is compliance shaping the blockchain and crypto industry?

October 2nd, 2018 · 34 mins 14 secs

About this Episode

Ahmed and Faisal sit down with the Tarik Mohammed, Chief Compliance Officer of OTC Supply.

Firstly, Ahmed brings up the Wall Street Journal’s article of identifying that $90 million in suspected criminal proceeds that flowed through intermediaries such as Shapeshift over two years. The discussion goes into how Monero, and more specially how these private transactions work along with explaining concepts such as zero knowledge proofs and atomic swaps.
Tarek lists the issues that the industry faces with these types of private cryptocurrencies and how these challenges can still remain with the rise of decentralised exchanges.

The conversation delves into whether or not cryptocurrencies are actually used for criminal purposes and Tarek explains the ‘know your flow of funds’ concept which has become a rising theme in the regulatory space and how it impacts exchange and OTC businesses going forward. They also explain how the Journal categorised potential addresses that were associated with criminal purposes.

Ahmed then moves onto the next topic which started as a debate on a WhatsApp group and was related to the next article covered. This article is regarding how an employee in a bank tried for many years to implement private blockchain solutions and concluded that he has lost faith in private blockchains. Faisal explains his view as someone who is helping to implement blockchain solutions at a governmental level.

The three talk about how current blockchain implementations worldwide seem to force a blockchain solution, rather than finding an alternative and better solution for a particular problem. Tarek adds that data classifications and uniformity are critical in implementing blockchain solutions at an enterprise and government level and sees this as one of the biggest challenges.
The three explain the concept of central points of failure and how these risks are increased under private permissioned implementations. Faisal also compares the incremental innovations from the disruptive innovations under these different scenarios.

The next article they cover is about Zebpay, a large Indian cryptocurrency exchange, which has decided to stop its cryptocurrency exchange operations due to the central bank banning banks servicing cryptocurrency projects making it harder for them to continue their operations.

Ahmed argues that emerging markets like India should be leading in this space and support the ecosystem. Tarek explains his experiences with emerging market regulators and how they have a wait and see approach regarding regulations and thus is harder for them to lead in a new nascent industry.
He goes on to discuss how different exchanges globally have different approaches to implementing their businesses, as some favour a more professional regulatory approach versus others who would launch services straight away without any regulation as a means to capture more market share.
The bitcoin ATMs recently installed in Area 2071 in the Emirates Towers in Dubai also gets a shout out due to the Central Bank of the UAE only allowing registered customers to buy and sell up to 1000 AED ($200-300) worth of cryptos per day and Tarek argues this is a good first step for the local industry rather than indirectly banning innovation as with the case of the Central Bank of India.

All of the above and more will be on this week’s episode of Encrypted!

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How Dirty Money Disappears Into the Black Hole of Cryptocurrency
How I Lost My Faith in Private Blockchains
‘Extremely Difficult’ Conditions: India’s Zebpay Shutters Crypto Exchange Over Central Bank Ban

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