- Only 20% of current crypto businesses will survive MiCA implementation
- Unregulated markets or jurisdictions with less control will attract start-ups
- BTC is far from recession-proof, abrupt price gains promote Ponzi schemes
A report by AMLBot suggests a possible split in the crypto landscape, with well-regulated markets attracting established players and unregulated spaces catering to startups and riskier ventures.
The SEC under Gary Gensler has adopted an aggressive stance, launching enforcement that paint a picture of crypto unfriendliness. In contrast, Hong Kong, Japan, and the EU are implementing frameworks that emphasize investor protection and attract capital.
MiCA's Potential Impact
The EU’s MiCA, for instance, is a unified licensing regime across Europe. Experts predict that only 20% of current crypto businesses (VASPs) may survive its implementation, with some companies already considering offshore relocation.
This happened in Estonia recently because regulatory complexity made it difficult to do business there.
While many EU countries can accommodate VASPs once they have obtained a MiCA passport, the number of licenses per country will depend on what resources state agencies make available. Small countries with fewer licenses and VASPs will also need to provide reasons for operating in a particular jurisdiction or market.
The Pluses
On the plus side, the market will become cleaner and financing will improve. Well-run companies will have an increasing share. Unregulated markets or jurisdictions with less control will attract start-ups and those with less funding, especially during bear markets.
According to Graeme Hampton, AMLBot Officer and Crypto Compliance Specialist, unregulated crypto service providers demonstrated increased responsibility for security during 2023. They are keen on increasing their knowledge as regulations take effect globally.
Global Regulations and Risks
On a global scale, FATF is earning more respect in the regulatory space, with OFAC, EU, and UK leading the way with their sanction regimes. Blockchain intelligence and investigation solution providers have led to lower crypto crime rates in 2023 compared to 2022, although ransomware attacks are up, and there is a slight shift into cyber.
Prospects in 2024 and Beyond
The current optimism is refreshing with signs of an upcoming bull run. However, one must proceed with caution as BTC is far from recession-proof. Abrupt price gains can promote Ponzi and get-rich-quick schemes.
Contributors
