As cryptocurrencies become more mainstream, regulators around the world are voicing concerns over the potential for illicit use of the technology, including fraud, money laundering and terrorist financing. At the forefront for regulators is the question of how best to regulate virtual currencies and initial coin offerings (ICOs), a type of public offering used to raise money for a new cryptocurrency.
Jeffrey Alberts, co-chair of Pryor Cashman's FinTech Group, recently spoke with Compliance Week about the challenges that lie ahead for regulators.
"It is difficult for U.S. regulators to regulate cryptocurrency projects for several reasons," he said. "First, the decentralized organization of many such projects often results in the absence of any formal corporate entity on which the regulators can focus their attention." Further, large numbers of participants are located outside the United States and, "many of the entities are so small that they do not have the infrastructure to respond to regulatory inquiries and attempts at oversight."
In spite of these issues, government agencies have begun working toward a regulatory regime.
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