Here’s how investors control cryptocurrencies in Singapore – Wired PR Lifestyle Story

Many first-time cryptocurrency users were attracted to promises of anonymity. With Bitcoin, they would be able to trade directly with each other without having to go through the bank.

Such cryptographic transactions were designed to be the digital equivalent of cash exchange, in the sense that they would be simplified and unsupervised. Users would be able to store value in digital wallets without leaving any personal information.

Of course, this came with inconveniences. After all, banks and financial institutions conduct Know-Your-Customer (KYC) checks for a reason: to prevent criminal activities such as money laundering.

In 2011, Bitcoin began to gain popularity for its illegal use. Silk Road was a currency chosen by users, a website that is now remembered as one of the worst markets for illegal trade.

Silk Road generated more than $ 600,000 in revenue, now worth more than $ 36 billion over two years. It was not until the end of 2013 that the Federal Bureau of Investigation (FBI) shut down the website and arrested its owner, Ross Ulbricht.

The FBI could only find Ulbricht because he used his real name on websites like LinkedIn and Stack Overflow, where he talked about launching Silk Road. After being prosecuted, his income in his cryptocurrency wallet was confiscated. However, others who shared the income were still in hiding.

So far, more than half of the total revenue on Silk Road has gone unnoticed. But as technology develops to help regulate the cryptocurrency space, funds can still be recovered. Authorities have begun to establish new ways to identify blockchain users, even if their wallets come without an ID.

Can users be identified through cryptographic wallets?

By default, a cryptographic wallet does not record information that identifies its owner. What he does recording is every transaction in and out of a cryptocurrency wallet. This information is stored in the blockchain and can be viewed by anyone.

With millions of transactions being made every day, it was almost impossible to keep track of cryptographic tracks.

However, over the years, tools have been developed that can collect blockchain data and see the flow of cryptocurrency from one wallet to another. Using these tools, a wallet with stolen or illegal cryptography can be identified.

After that, it becomes a waiting game. While the crypto remains on a decentralized platform, the authorities cannot own or track the owner directly.

However, if the owner tried to convert the money into fiat money, he would probably reveal himself in the process. This is due to the cryptographic regulations now in place in Singapore.

How does Singapore’s cryptocurrency regulations govern transactions?

The main way to buy cryptocurrency using fiat money or convert fiat currency into money is through a centralized exchange (CEX).

Singapore includes companies like DBS Vickers and the Independent Reserve. These licensed exchanges are governed by the Singapore Monetary Authority (MAS) Payment Services Act. Here are the points in the minutes of the exchange:

a. due diligence to customers by verifying their identities and businesses;

b. monitoring customer transactions for signs of money laundering and terrorist financing;

c. United Nations review of relevant international criminal lists of clients; and

d. maintain accurate records of customer activities and initiate a process to report suspicious transactions to MAS.

Apparently, if he were to buy cryptography using SGD in Singapore, he would have to leave his personal data. The same applies if they could transfer cryptography from their decentralized portfolio to CEX.

Returning to the previous example: authorities can control decentralized wallets with illegal cryptography, and if the owner tries to transfer them to CEX, they can kidnap them.

This is possible because CEX users are not stored in individual encryption wallets. All value is stored with the same CEX, along with the record of the amount owned by each user.

There are also regulations regarding the information to be shared between CEXs when a transaction is made.

What is the Crypto Travel Rule?

From January 2020, MAS implemented the Crypto Travel Standard established by the Financial Action Task Force.

As a rule, when a cryptocurrency is transferred between two CEXs, the information of the users involved in the transaction must be shared between the exchanges.

When the transaction exceeds S $ 1,500, the sender’s address, IC number and date of birth are sent to the CEX recipient. For transactions below this threshold, only the name and portfolio ID are shared.

Currently, there are no regulations that stop sending or receiving cryptocurrencies in a decentralized wallet.

Exchanges are warned that these transactions are more likely to be illegal, and that they are required to comply with the necessary due diligence measures.

Slot: P2P crypto exchanges

P2P exchanges allow users to bypass CEX regulations and convert them between cryptocurrency and fiat money.

On such platforms, users negotiate directly with each other after agreeing on a fixed price. A user sends money by bank transfer and in return, the recipient sends the cryptocurrency to his wallet.

Since there is no record linking the two transactions and the cryptocurrency never leaves a decentralized portfolio, it is impossible to keep track of the aspects behind the trade.

P2P exchanges are often used by people living in countries where owning cryptography is illegal.

It can also be exploited by users trying to download stolen cryptography. Aware that coins cannot be withdrawn through a CEX, these users can sell large amounts in P2P exchanges, offering a rate that is slightly lower than the market rate.

What does the future hold?

As a result of decentralization, the ability to remain anonymous in a blockchain is left to the user. However, the authorities are still able to regulate the space by controlling the entry and exit points. This seems like a fair compromise, as it avoids the illegal use of anonymity, allowing regular users to continue to benefit.

That said, new ways of hiding blockchain transactions have begun to emerge. As technology evolves, it is likely that new regulations will follow in the near future.

Featured Image Credit: CoinFlip