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Thinking as widely as possible about the crypto ecosystem

Thirteen years ago, an anonymous person or entity named Satoshi Nakamoto published the iconic Bitcoin whitepaper. The whitepaper, which comprised only nine pages, contained enough to change the world, and crypto currencies have since moved from an obscure curiosity to the mainstream. The total market value of all the crypto assets surpassed $2 trillion as of September 2021 – a 10-fold increase since early 2020, and almost every major bank now has teams working in digital assets.

The success of Bitcoin and the crypto ecosystems as viable investments continues to attract investors from all walks of life – from individuals who have founded enormous tech companies to those buying digital assets as a diversification tool. Money as we know it is undergoing a reinvention, and an entirely new financial ecosystem is being built in front of our eyes.

Although the extent of the adoption of crypto assets is difficult to measure, surveys and other measures suggest that emerging markets and developing economies may be leading the way. Here are some critical touchpoints for building a robust and safe crypto ecosystem.

Creating true global accessibility

Cryptocurrency exchanges play a vital role in driving adoption around the world, but even the biggest operations face challenges when trying to expand their services. The advent of cryptocurrencies has changed the way people look at transacting across the world, with dependency on traditional banking systems no longer the only option available to people.

Blockchain networks and cryptocurrencies can bypass conventional financial systems and allow people to transact directly without doing so through a centralised institution. However, mainly because of security risks, there are barriers to entry for the uninitiated. Therefore, many of those new to crypto use exchanges as their points of entry into the financial ecosystem. 

Building a robust and secure cryptocurrency exchange and launching it in different jurisdictions adds multiple layers of complexity that requires an immense number of resources and energy. They need to be capable of handling wildly spiking amounts of volume with next-to-zero downtime while simultaneously meeting regulatory requirements. 

Competition among these firms is fierce, and to gain a stronger competitive edge, they should look at expanding the market rather than fighting for the existing pie. Yet working across borders and continents requires innovation and agility, given that many countries have their own regulations and laws around the use of cryptocurrencies and the flow of fiat currencies. It’s therefore important to obtain clear regulatory guidance to determine the appropriate product offering and target audience. 

Users in different markets and regions also have different preferences and habits, and crypto firms need to adapt to each audience accordingly. Every market has its awareness and knowledge gaps, so it’s critical to understand the specific needs of users in different regions. First, learn the intricacies of a new market before jumping into it so that you can provide the local customer base with customised products and services. 

Another considerable undertaking when running a 24/7 cross-continent operation is to provide adequate customer support, regardless of the time zone. Companies that are beginning to build operations in support of the emerging digital assets ecosystem are having to reckon with the difficulties of a world-wide, multiple time zone, multiple-language customer base that is working on a decentralised platform. These are not easy challenges! 

Strict control measures

Since there is no single regulatory body for the cryptocurrency industry, firms had to adopt similar practises used by global financial institutions, which face strict control measures from regulatory bodies. Know Your Customer (KYC) compliance, where firms collect certain information from customers to confirm their identities, has become more common in the crypto space, in line with increasing regulatory oversight. 

KYC and Anti-Money Laundering (AML) guidelines – the process of verifying customers and the source of their funds – often go hand in hand and are the two standard practises that crypto firms must abide by to operate. However, compliance involves more than just adhering to KYC, AML, and other regulations, since sanctions may prevent firms from operating in certain countries. 

The global landscape has such vastly different regulatory and legal parameters that the first port of call for crypto firms looking to expand should be a country’s securities and exchange commissions and its financial regulators. Given that there is no global consensus for classifying and regulating digital assets, crypto firms must ideally obtain professional legal advice to ensure compliance in each jurisdiction in which they operate. It will also speed up the licensing process.

A key driver of success would be a crypto firm’s ability to adapt to regulatory parameters as it continues to expand. The successful platforms of the future would be those that can swiftly embrace and maintain the developing standards for the cryptocurrency market.

Onboarding legacy systems 

To create accessibility for new users, cryptocurrency exchanges need to establish fiat gateways to their platforms, which requires building relationships and compatibility with the traditional banking system. This can be quite a challenge since some banking institutions are still apathetic and risk-averse towards crypto.

However, the wheels of progress are slowly turning as regulators and the legacy banking system gain a better understanding of crypto and blockchain systems. More are onboarding the technology to adapt to the changing financial landscape. As crypto firms gradually expand their global footprint, so will be the more general adoption of cryptocurrency technology.




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