Cryptocurrency Brokers Advocate for Transparency Prior to Implementation of Regulation


Some of Europe’s biggest digital-coin brokers are calling for the regulation of the exploding cryptocurrency market. This request comes in an attempt to clear the eair and shake off the negative opinions that they help criminals launder money.

Companies like London’s eToro Europe Ltd. and Vienna’s Bitpanda GmbH say “know-your-customer” (KYC) rules would enable trading platforms to go mainstream very easily, gain new clients and eventually tap into institutional businesses.

“We’d be happy to have regulations, so we know where we stand,” said Eric Demuth, co-chief executive officer of Bitpanda. Demuth says he frequently meets with potential regulators at Austria’s Finance Ministry. The 31-year old added that moving into loosely regulated jurisdictions like Malta or Gibraltar is not interesting as “it doesn’t look good.”
Pushing for transparency may appear ironic in an industry that grew from the shadows since 2009. In some countries, people can buy bitcoin from specific ATM machines without showing IDs and use it for trading or buying goods, illegal imports and/or even property—leaving no trace of identity behind.

“This is all about where the burden of proof lies for anti-money-laundering, so wanting regulations seems very sensible,” explained Marc Ostwald, global strategist at ADM Investor Services International. “Even if you’re making a killing in trading, someone could come up with an unexpected piece of regulation that puts a big red line through your business plan,” he added.

Japan as an Example

San Francisco-based startup Coinbase has more than 20 million users in the U.S. while strictly documenting its client. In the Asian region, Japan’s supportive laws have made it the global center for cryptocurrencies. In Europe, the market is rather small and for most brokers, nabbing an institutional customer is difficult or almost impossible. In-house compliance rules usually limit dealings with unregulated exchanges.

The European Commission together with regional supervisors are still studying whether current EU laws are applicable to crypto trading. The crypto industry, whose value grew up to $800 billion in January, has decreased to roughly $430 billion, according to data from

At the same time, several tax agencies, such as the SEC in the U.S. and in Spain, have implemented stricter laws and demanded brokers and banks to turn over names and information on crypto clients—not a pretty picture for a customer who expects to have some level of anonymity.

Online cryptocurrency trader eToro claims cryptocurrencies now make up 75% of its business and Managing Director Iqbal Gandham is pushing towards brining transparency to their industry.

“The benefits of regulation are clear. An appropriate framework would serve to both protect consumers, and ensure the longevity and legitimacy of the industry itself,” he said.

Although some brokers seek for digital assets to be regulated in the same way as a traditional asset like gold is regulated, Gandham rejects this kind of idea.

“Given that we are dealing with new and nascent technology, we wouldn’t want to simply cherry pick from existing regulation developed for other asset classes,” he said.

Gandham added that potential rules “would need to focus on those crypto organizations that interact with consumers –the ‘on’ and ‘off’-ramps between fiat and cryptocurrencies. You can look at Japan to see how this might work.”


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