As Donald Trump returns to the political spotlight with his re-inauguration to office, the cryptocurrency industry appears to be bracing for the growing national interest in blockchain innovation, while also remaining somewhat skeptical about changes the new administration may have in store for them.
Nominis insights: what could the compliance industry anticipate?
Growth and standardisation of compliance
Though perhaps previously skeptical, Trump more recently has demonstrated a pro-crypto stance, and suggested a strong interest in the mainstream involvement of cryptocurrency most notably demonstrated by the proposed Bitcoin Act.
Despite his apparent support for blockchain finance, we may see the government amplify its focus on cryptocurrency as a vehicle for fraud, sanction evasion and general illicit activity.
The emphasis on national security, a typical staple of his approach to leadership, may translate to expanded sanctions lists, with more crypto wallets tied to adversaries blacklisted by the OFAC, and tighter reporting obligations and requirements on financial institutions and exchanges. Both of these consequences would contribute towards greater compliance, and a larger role for transaction monitoring.
$TRUMP and memecoin regulation
Adding to the complexity of Trump’s upcoming administration, Trump and wife Melania have recently both launched memecoins, $TRUMP and $MELANIA. The notion of a sitting president with a cryptocurrency venture is entirely unprecedented, and may require heightened attention from regulatory bodies.
In addition, Elon Musk’s prominent role supporting memecoin, elucidated through his ‘DOGE Office’ introduces new dimensions of risk and compliance issues. Musk’s ongoing influence in the crypto world also demonstrates the need for potential adaptations to ensure the cryptospace remains compliant and safe.
Memecoins such as dogecoin, $TRUMP and $MELANIA typically lack the regulatory maturing of established cryptocurrencies like Bitcoin or Ethereum, but their popularity and utility for payments mean they attract much attention.
Higher adoption rates of memecoins may attract bad actors, leveraging the network for money laundering or fraud, especially while they may lack regulation and safety. We may also see a rise of politically-themed tokens, tied to political figures which may attract extremist groups, or scammers who wish to exploit the brand, creating counterfeit tokens or phishing scams.
Blockchain technology during Trump’s second term
Trump’s return to office, together with Musk’s prominent role in the decentralised finance space, underscores the need to adapt to changes in the compliance space.
The inauguration could mark a turning point for cryptocurrency compliance, emphasizing the balance between innovation and encouraging accountability in the digital asset space.
How we can keep our cryptospace safe?
Real-time monitoring: due to the potential for an uptick in sanctions, fraud or malicious actors investment in real-time monitoring tools is even more important. Tools that can process updates, detect malicious patterns or monitor transactions at rapid speed put companies in good stead to ensure compliance to most recent compliance obligations.
Collaborate with regulators: Fortifying strong relationships with regulatory authorities, and even sanction institutions such as OFAC, ensure compliance despite potentially quickly-evolving changes.
Remain updated and educated: institutions that operate in the crypto space will always benefit from further education of themselves and clients in order to understand the evolving regulatory landscape and critically, can mitigate risks with ease and efficiency.
FAQS:
Q: Who is OFAC?
OFAC is an example of a regulatory authority. Specifically OFAC (Office of Foreign Asset Controls) is a US office of the Treasury, who administer and enforce economic sanction programs against countries or groups of individuals who are bad actors. For example, OFAC is responsible for creating, updating and upholding lists of sanctioned bodies.
Q: What is a memecoin?
Q: What is $TRUMP