Praised for its ability to liberate those living under strict government control or geopolitical warfare and provide a robust, secure platform to store and transact, it’s no wonder that the cryptocurrency has exploded over the past few years.
Despite cryptocurrency’s rapid adoption, however, regulations are still a problem. The cryptocurrency market is not as heavily regulated as traditional banks. This was a characteristic that was lauded by the first cryptocurrency enthusiasts.
Despite this, cryptocurrency is volatile and susceptible to manipulation.
Bitcoin is an example. It dropped to $30k and then jumped up to $69k in a matter of months.
Hacking is another problem in the cryptocurrency industry. Hacking attacks can lead to financial losses for cryptocurrency traders and investors. Lack of regulation limits the government’s ability to protect investors’ assets and users are left to fend for themselves to reclaim lost investments.
Europe’s Fight Against Money Laundering
While it is slow to get started, institutions and governments are making efforts to regulate the cryptocurrency industry. One example is The EU, which proposed to implement a number of recommendations from the Financial Action Task Force (FATF), on how to reduce money laundering via the transfer of crypto assets.
Among the FATF’s recommendations is that travel rules must also apply to crypto transfers. Travelers must know who is receiving and transferring the assets when they travel with money.
Another proposal from FATF is that crypto exchanges should be required to collect personal information about a person who transfers money from “unhosted” crypto wallets—those in which individuals can store funds independently. EU proposes that crypto exchanges should not only collect the information but also verify it and notify the appropriate authorities about certain transactions.
The legislators hope to prevent money laundering (ML), illegal use, and protect consumers by regulating crypto products, wallets, and exchanges.
Enter the Concordium
While many industry participants have brought up the negatives in legislation, it’s also true that there might be some benefits. Regulation could increase trust among institutional investors, and promote mainstream adoption.
Concordium is a new proof-ofstake (PoS), blockchain that uses its built-in ID to solve the trifecta: security, scalability and decentralization. Its focus on being business-grade is what makes the blockchain stand out from other competitors. Specifically, it believes that the key to enhancing blockchain adoption is solving the issue of ‘trust’ by providing ID mechanisms. This could help to ease compliance with regulatory requirements that can unlock many business opportunities.
In addition, the blockchain’s business model prides itself on transparent, stable, low transaction fees and encourages sustainable business models over time. It uses a price stability system to ensure that transaction costs can be fixed in real-world fiat terms, rather than being based on its native token (CCD), valuation at the time of transaction.
What makes Concordium different?
Speaking on the matter was the CEO of the project, Lone Fønss Schrøder, who was also the past Chairman of Saxo Bank’s Board of Directors:
“Concordium was born out of a conviction that regulation will come.”
She explains that “the Concordium blockchain was created so that users can continue to operate privately, but only if they’ve been authenticated by an independent 3rd party. Every transaction is protected by an encrypted ID stamp. If the need arises, and the courts so order, a user’s identity can be revealed by authorizing a formal ‘privacy revocation’ process.
“Our architecture ensures that individuals can be held accountable for their actions if the need arises, but more importantly research has proven that the knowledge that their identity can be uncovered is enough to make people act more responsibly,” says Schrøder. “Knowing that our users may be asked to comply with regulation, has prompted us to build a unique solution which ensures greater trust, responsibility and accountability – all due to our encrypted, authenticated identification framework,” says Schrøder.
Schrøder feels convinced that some competitors will be challenged to find solutions to the new requirements arising.
“In some cases, they may be severely limited by their communities. While we applaud the need for a decentralized future economy, this does not require anonymity as a basis.”