What will make cryptocurrency transactions safer?

Publication date: 12 Sep 2021

In the first half of 2021, global cryptocurrency fraud reached $1.5 billion. This is 2-3 times more than in 2020. In 2021, the volume of fraud is expected to grow by 15%, according to Zecurion company experts.

The main reason for the growth of cryptocurrency fraud was the desire to make money from the growing segment at a time when interest rates are low and volatility in traditional financial markets is high.

Fraudsters use cryptocurrency to conduct illegal transactions and prohibited trading. The lack of mandatory verification allows cybercriminals to remain anonymous.

What will make cryptocurrency transactions safe?

Ensuring the security of cryptocurrency transactions is a critical concern for regulators and users alike. In traditional financial systems, identification is essential to carry out most transactions, and experts believe that implementing a similar identification system for cryptocurrencies should be the next step toward legitimizing the crypto market.

Many countries have already begun integrating references to cryptocurrencies within their legislation, emphasizing the need to adhere to anti-money laundering (AML) laws. As a result, regulators are increasingly demanding that cryptocurrency exchanges implement mandatory customer verification processes. This move aims to enhance the security of cryptocurrency transactions by creating a clear trail that can be monitored for fraudulent activities.

However, these regulatory measures pose challenges for exchanges. The requirement for stringent identification can deter new customers, as many users are drawn to the anonymity and ease of access that cryptocurrencies typically provide. Consequently, while platforms recognize the necessity of compliance to meet legal standards, they are often reluctant to adopt measures that could limit their customer base and affect their profitability.

Governments have already signaled to the crypto industry that they will be enforcing stricter identification systems to combat fraud. Cryptocurrency exchanges now face a crucial decision: either comply with these regulations and enhance their security protocols or risk shutting down or reverting to unregulated operations in the shadow economy. The latter option may lead to an increase in fraudulent activities and diminish user confidence in the overall security of cryptocurrency transactions.

To address these challenges, exchanges must prioritize implementing robust identification and verification systems that protect both their businesses and their customers. By doing so, they can build a more secure cryptocurrency ecosystem that aligns with regulatory requirements while fostering trust among users. Ultimately, the path to safer cryptocurrency operations lies in striking a balance between regulation and user accessibility, ensuring that the growing crypto market can thrive securely and transparently.