There are several things keeping Bitcoin from reaching mainstream adoption but one of the biggest factors are hacks and scams which are rife within the industry. It seems that every week we are reporting about some sort of new hack or scam that has duped investors out of their crypto.
As to why this has an impact on adoption, users are able to receive payments from unknown sources from anywhere in the world, which makes it quite hard for the network to keep out the proceeds of scams, drug trafficking, cyber attacks and more.
Until now, it’s been pretty hard in being able to transform illegally earned crypto into real economic spending means. Not many merchants will accept cryptocurrency, to those dealing with fraudulent gains must exchange crypto into fiat currency.
As reported by the Irish Times:
“That involves taking foreign exchange risks and then transferring the fiat money through wallet and exchange services into the core banking system. The end point is a bank account, which is significantly harder to obtain than a crypto wallet.”
Something is changing though as one of the biggest gateways into the core financial system, the Visa network is opening itself up to crypto-funded debit cards.
In fact, others have tried to launch these kinds of crypto cards but due to compliance reasons, couldn’t get them off the ground. Visa’s latest co-operation with Coinbase for a UK crypto card is slightly different as the crypto exchange says that the card will allow customers to “spend funds from your cryptocurrency wallets” anywhere Visa is accepted, which is basically anywhere at this point.
This raises the question of how Coinbase was able to satisfy anti-money laundering and Know Your Customer regulations.
The regulatory environment surrounding crypto has been changing and some wallet providers and exchanges now function with official blessing under specific compliance rules.
Even if the core banking systems, the cost and risk of dealing with potentially non-compliant correspondent banks with light-touch regulation has led institutions in places with stricter insight to purge their banking relationships.