Crypto investor Ari Paul predicted that much of the crypto ecosystem would only allow withdrawals to whitelisted addresses within a year or two.
In a tweet on August 26, BlockTower Capital co-founder and chief information officer Ari Paul predicted that there may also be a disconnect between “clean” currencies that could be traced back to regulated organizations and everyone else.
Global financial regulators are calling for stricter compliance standards for crypto exchanges and companies. Ball reiterated this point by saying that the largest exchanges are implementing compliance processes after they have been told they are not complying with legal standards.
As usual, the concern arises from money laundering in cryptocurrency. Traditional exchanges actually require KYC (Do you know your customer) and have account limits. However, users can resort to any wallet.
New Financial Action Task Force (FATF) regulations change this through a “travel rule” under which Virtual Asset Service Providers (VASPs) must collect and transmit customer information during transactions.
Ball suggested that there could be a phase in which accounts on central exchanges around the world are treated as bank accounts with the same controls and oversight, and he also suggested that there may be a new business boom in the “laundering” of crypto assets in the whitelist category.
“I think you’ll have a real ecosystem of white-listed coins as well as a strong gray market with little lines in between.”
The ever-tightening regulations can be seen in BitMEX’s recent announcement that the user verification program should start August 28 and be completed early next year. The company had previously been slightly lenient with regulatory compliance.
Under the new requirements, BitMEX users are required to submit a full identity disclosure within six months. This process is similar to what customers need to do when opening a bank account.