Cross-chain transactions promised to create a seamless crypto economy, yet new regulatory standards are becoming an increasing barrier for participants. This creates a need for enhanced compliance to attract institutional capital.
Compliance Challenges in Cross-Chain Transactions
Institutional capital is waiting for compliance assurances before moving into cross-chain transactions. Standards like Markets in Crypto Assets (MiCA) and the FATF Travel Rule dictate who can attract global liquidity. With increasing interest in cryptocurrencies, compliance is growing in significance over technology.
Deficiencies in Existing AML Tools
Current issues in AML monitoring for cross-chain transactions are becoming evident. Tools designed for centralized exchanges fail to effectively track decentralized bridges. The system, based on outdated methods, does not meet the needs of an era where decentralized protocols lack identification elements.
The Necessity for Self-Regulation in Decentralized Systems
Decentralized protocols must take the initiative for self-regulation to avoid stringent oversight from authorities in the future. Market players recognize that compliance is not only necessary but a business imperative. This opens opportunities for startups developing corresponding compliance tools.
Compliance may become a key aspect in attracting institutional interest in the crypto industry. The path to evolving opportunities in decentralized finance lies through integrating compliance norms while preserving their decentralized essence.
