The US is lagging behind other countries when it comes to blockchain regulatory compliance rules and regulations. There are no clearly established lines on the road for the blockchain community to follow. This lack of action could place the country in a position to miss out on the economic benefits of the new technology.
Currently, according to a LexisNexis Risk Solutions global study, nearly a staggering 200 billion dollars are spent annually by companies just for financial crime compliance. The cost is increasingly impacted by the constantly changing rules and regulations around KYC (know your customer) and AML (anti-money laundering).
Perhaps the issue is that there are so many regulatory agencies within the US at state and federal levels. The SEC (Securities and Exchange Commission), The Commodity Futures Trading Commission, The U.S. Treasury Department, and Federal Reserve for starters. Each of these agencies tend to fly solo when creating regulations. Open communication between them to establish a plan of action moving forward just makes sense. Hopefully, they will make the same observation in the near future.
Why does blockchain technology make it easy for regulators? More specifically, BSV blockchain. This platform already offers much of the necessary features that regulators require. No need to recreate the wheel, so to speak. It creates an unchangeable record for every transaction that takes place and can be stored on or off chain. Each of these transactions is timestamped so the exact time and date of each transaction is known. Just as important, it’s completely scalable, immutable, and auditable.
“And the way to design that, of course, is through overlay networks that connect to the chain and you go to all your time and date stamps and everything else, which are completely immutable, that can be used for audit purposes and so on and so forth,” said Stefan.
Using blockchain technology, regulators would have nearly real-time access to regulated financial organizations’ data in a secure environment. Regulators would be able to stay ahead and be proactive as opposed to the traditional reactive process. Benefits to the financial organizations include time savings and cost savings because they would not have to compile lengthy reports. All parties could also be more confident in the overall process.
Checkout the complete episode of Hashing It Out with Stefan Matthews here: