US regulators have found fault in one of the largest Cryptocurrency exchanges in the market. Coinbased have agreed to pay a $50M fine that was brought up upon them over violating anti-money laundering laws. These arrangements were settled with the New York State Department of Financial Serives, whereby Coinbase were also required to spend an additional $50M on KYC laws, compliance laws, and other regulatory laws they have been seen to overlook in the past.
Cryptocurrency firms are seen by the public as businesses that are bringing in billions of dollars. But in comparison when you think about what a Crypto Exchange’s purposes are, it is an investing firm. People invest their money and expect to make returns in the market through their investments, and those who lose their money, lose through fair means of price changes. Crypto investing is not as simple as gambling where the casino will earn profits off the customers losses. So to think these firms have millions to spend carelessly, on fines and compliance programs that really have no means in costing so much. To then expect that the firm won’t collapse and go bankrupt is ridiculous. The firms can’t withstand their costs, do fair business for their customers, and pay $100M over some regulations that were seen to be violated. Then once the firm fails, the founders, board of directions, and company are all blamed for the collapse, while regulators aren’t seen to be at fault at all for creating a system that makes it very hard for companies to grow in this sector.
On the other hand, while regulators do make it hard for Crypto firms to grow, some activities these regulators prevent are serious. For example, Coinbase was the platform whereby a digital thief stole $150 million from a company by claiming to be an employee of that company when opening a Coinbase account.
The debate remains, where is the balance between regulation that helps our communities and over-regulating that destroys companies.