In the blockchain industry, the use of acronyms is very common. It is so common that newbies can easily get lost in discussions. That’s why we’ve put together the most popular crypto acronyms that you need to know. Cutting across technical terms, to financial and technological acronyms, get ready to knock the socks off your dinner party guests.

A proper understanding of these acronyms will help anyone new adapt well into the crypto industry. Proper understanding could make all the difference between a successful and an unsuccessful venture into the emerging ecosystem of cryptocurrencies. Here we go:

PoW

Proof of Work is the process behind the mining and maintenance of cryptocurrency networks. It requires a miner to solve a mathematical problem in order to confirm a transaction on the network, and rewards the fastest miner in the relevant cryptocurrency. It generally requires a lot of computing power, and as the network grows the problems get more challenging and the rewards become less.

PoS

Proof of Stake uses validators instead of miners for verifying transactions on the networks they maintain. Instead of miners competing to solve an equation, algorithms chose the verifier based on their stake (amount of crypto they hold). Instead of rewards, the user receives transaction fees.

TxID

This acronym stands for Transaction Identification. It is a unique number that is used to identify a Bitcoin transaction on the network. It usually appears as a long series of alpha-numeric characters and can be used to find the transaction that it represents on the network.

FUD

Fear Uncertainty and Doubt is an expression that is popularly used by traders. FUD can be used as a tool by larger altcoins to cast shadows on the smaller ones, and has been known to affect market activity. Always DYOR in order to avoid FUD.

HODL

Among the crypto acronyms that you need to know is HODL. It originated from a typo in a forum sometime in 2013 and has since become a prominent word among cryptocurrency users. It is slang for the original word HOLD. Traders and investors in crypto use it to describe holding onto digital assets.

DPoS

Delegated Proof of Stake is another kind of protocol that verifies transactions, and also acts as a form of digital democracy. Considered to be the least centralised of all the protocols, DPoS gives every network user holding the relevant crypto a vote. Delegates are selected and voted in by the community, and are responsible for validating transactions, and, like PoS, are rewarded in transaction fees.

ICO

Initial Coin Offering (ICO) is a non-regulated system that startups and companies use to raise money for their projects. It is similar to the IPO exercise in mainstream stock markets, only that ICOs offer platform tokens to the investors rather than equity. ICOs are a form of crowdfunding for the crypto community.

STO

Security Token Offering (STO) is the love child of an ICO and IPO. The difference between STOs and ICOs are the characteristics of the tokens, and that STOs comply with security regulators and are asset-backed. The token issued is considered to be an investment product backed by a real-world assets (a company or product).

Dapps

Decentralised Applications (dapps) are open-source applications leveraged off blockchain technology and run on peer-to-peer networks. This category of software was made popular by Ethereum, which by design is a platform for the development of dapps. There are so many dapps in the blockchain industry today, with their particular tokens based on the parent blockchain on which they are built (i.e. a lot of cryptocurrencies listed on Coinmarketcap are actually ERC20 tokens, built on the Ethereum blockchain).

SegWit

This is the short form for Segregated Witness. It is the name given to a soft fork that was implemented on the Bitcoin protocol to solve congestion issues responsible for delayed transactions. This update changed how data is stored on the network, separating data from the transaction itself.

FOMO

Fear Of Missing Out is a common acronym among traders and investors. It is used when traders anticipate a price movement in a certain direction that could make them profit. In order not to miss out on the opportunity, many of them jump into the market without doing their research. This scenario is very common in a fast moving market like the Bitcoin market.

P2P

This is used to refer to the decentralised transaction method known as Peer-to-Peer. This is the fundamental nature of blockchain technology that lets users interact and transact without needing any intermediary.

DYOR

Do Your Own Research is a common acronym in the crypto industry. It comes as a gentle reminder for individuals not to believe everything they hear or see, and rather to do their own investigating.

ERC

This acronym means Ethereum Request for Comments. It is the preceding acronym for all Ethereum based token standards, of which the most popular is the ERC20.

‍

It's 2023 and you've decided to get involved in the crypto industry and find out what the fuss is all about. You've made a smart choice, and we're pleased to welcome you. In this step-by-step guide, we'll be showing you an overview of how to perform the following tasks:

• Create an account
• Deposit funds
• Buy Bitcoin, Ethereum or any other cryptocurrency
• Sell a cryptocurrency
• Withdrawal funds

Investing in digital currencies can feel daunting at first, but once you've made your first purchase, transaction, or sale, you'll see that using cryptocurrencies is simpler than what one might expect. Be sure to keep an eye on market prices, as volatility in the crypto industry can go through waves, and educate yourself on the coins that you wish to purchase. Whether you're a trader/investor in the UK, EU, EEA, or Australia, everyone can gain access to the crypto markets through the Tap mobile app.

In this article, we're going to show you the ropes, guide you through the process and explain step-by-step how to gain the skills to successfully operate in the crypto space and increase your investment portfolio. Whether you've traded on traditional stock markets before or not, we're going to show in a simple and easy-to-digest manner, no previous trading experience is necessary.

Step 1: create an account

The first and most important decision to make before buying cryptocurrencies is determining where to buy them from. With plenty of options available on the market and plenty more news stories about them, it's imperative that you select a trustworthy and reliable source.

Tap mobile app ticks these boxes, and proves so by being fully licensed and regulated by the Gibraltar Financial Services Commission. The platform has over 130,000 registered users, at the time of writing, operates in 28 countries across the globe, and has been nominated multiple times for PAY360 Awards (previously the Emerging Payments Awards). 

To create an account on Tap, simply follow these steps:

1. Download the Tap mobile app from either the Apple or Google Play store.
2. Create an account by filling in the relevant information. If you make a mistake simply go back and alter it before moving to the next step.
3. Once the account is set up you will be asked to complete the KYC / identity verification process. Simply follow the onscreen prompts and submit the required information. 
4. You will receive an email confirmation once your account is all setup. 

Step 2: deposit funds

In order to buy cryptocurrency through the Tap app, you will need to deposit funds. This can be done in both crypto and fiat currencies, however, we will focus on the fiat deposits today. 

1. Select the Cash wallet under Assets. 
2. Select the fiat currency you would like to deposit, your options are US dollars, Pound Sterling, or Euros. 
3. We're selecting GBP, which will open the wallet and offer you the option to choose from a debit card or bank transfer. 
4. Fill in the relevant information and perform the transaction. 
5. Once the funds have cleared they will appear in the relevant Cash wallet.

Step 3: Buy Bitcoin,  Ethereum, or any other cryptocurrency

Now for the exciting part! It's time to buy digital currency. For the sake of this tutorial, we're going to show you how to buy Bitcoin, however, the process is consistent across all cryptocurrencies. 

1. Under the Assets section, select Crypto.
2. Choose the cryptocurrency you would like to purchase. 
3. Once in the crypto wallet, select the blue Option button and then select Buy. 
4. You'll be given the option to decide how to pay, simply scroll to the bottom and select Pound Sterling (or the fiat currency that you deposited).
5. Enter the amount that you would like to purchase.
6. Select the Confirm Trade button and enter your passcode.
7. Once the transaction is completed, the funds will appear in your Bitcoin wallet.
   ‍
   ‍

Step 4: Sell A Cryptocurrency

Now that you're familiar with how to buy crypto, it's high time you learnt how to sell. 

1. To sell Bitcoin (or any other cryptocurrency), go to the relevant wallet from Crypto under Assets on the homepage. 
2. Select the blue Options button, and then choose the Sell option. 
3. From here you can decide whether you'd like to sell the cryptocurrency for another currency or for a fiat currency. In this example, we'll use GBP. 
4. Select the Pound Sterling option and enter the amount of BTC you'd like to sell.
5. Proceed with Confirm Trade. 
6. Enter your passcode and wait for the transaction to take place. 
7. The funds will then be available in your Cash GBP wallet.

‍

‍

Step 5: Withdrawal Funds

Completing the final process in this step-by-step guide, we're going to explain how to withdraw funds. You have a number of options here as the Tap app allows users to pay bills directly from the app using available funds. Alternatively, you can withdraw the funds to your own bank account.

1. From the home screen, select Cash under Assets.
2. Select the wallet from which you would like to withdraw funds. 
3. Choose the Send to Bank Account option and add a Beneficiary by clicking the blue plus button. 
4. Select the relevant option (to myself, to another person, to a business) and proceed by entering the banking details.

Tap Into a Brighter Future With Crypto

On top of the simple and easy to use app, Tap also offers highly secure wallet solutions that are integrated into your account from set up. From the app, you can securely store and manage a wide range of cryptocurrencies from one convenient location. 

Bitcoin 101

Here are several frequently asked questions regarding Bitcoin, the first cryptocurrency to come into existence.

How does Bitcoin work?

Bitcoin uses blockchain technology to maintain and operate the network. Instead of a bank or government entity in charge, the Bitcoin network operates by using a number of computers interconnected with one another through blockchain technology. All transactions are executed and stored on the blockchain, in a transparent, immutable manner that allows anyone, anywhere, at any time to observe.

Where do Bitcoins come from?

Bitcoins enter circulation when transactions are confirmed. Say one person sends another person BTC, once the miner confirms and executes the transaction the miner will receive a reward for their efforts, in the form of newly minted Bitcoin. This is where new Bitcoins come from.

What are the downsides of Bitcoin?

Bitcoin has for a long time been viewed as a risky asset, however, over the years it has proven to deliver impressive returns, not to mention the technology behind it changed the financial landscape as we knew it. However, one should never invest more than they're willing to lose.

Where can I buy Bitcoin?

You can buy Bitcoin and a number of other cryptocurrencies directly through the Tap mobile app. Simply create an account, complete the identity verification process and then you can start buying Bitcoin and other cryptocurrencies.

Where can I sell Bitcoin?

Users who wish to sell Bitcoin can also do so through the Tap mobile app. Simply select the cryptocurrency you would like to sell and confirm the order. You will need to have sufficient sums in the relevant wallet at the time of executing the sale.

What's the best Bitcoin wallet?

While there are plenty of different types of Bitcoin wallets, users can gain access to a wide range of crypto wallets through the fast and secure Tap app.

‍

Many investors have made a lot of money through the stock markets, however, in recent years a new asset class has entered the scene. Not just any asset class, the best performing asset in the last decade. While conservative investors have steered clear, many investors have incorporated cryptocurrencies into their investment portfolios. 

In this article, we explore the differences between crypto vs stocks. While investments are driven by profits, understanding the difference between the two and what each one is is arguably fundamental to making any money from them. 

What are stocks? 

Stock, also referred to as equity or shares, is a financial product sold by companies that offer a percentage of ownership in the company. These "certificates of ownership" entitle the holder to dividends from the company's market performance. 

Stock in a company holds equal risk and reward. Should the company have a bad year, the stock price will reflect this with a decline in the unit price, but should it perform very well the price will increase. The profits are shared through a simple transaction.

These financial products are legally considered securities and are used by businesses or governments to raise capital from the market, offering the holder part ownership in the company selling the stock. Stocks are traded on authorised stock exchanges, of which there are over 60 around the world. The most popular are NASDAQ and the New York Stock Exchange (NYSE) which manage the sales of stocks relevant to that platform.

What are cryptocurrencies?

Cryptocurrencies are digital assets native to blockchain platforms. The first cryptocurrency launched in 2009 and provided an alternative cash system that allowed users to transact and store their funds without the authorisation of a third party. As a solution to the global financial crisis plaguing the world at the time, Bitcoin offered a decentralised solution to people taking control of their own money.

Following the launch of development-focused Ethereum several years later, cryptocurrencies started to offer solutions beyond just payment platforms. There are over 2m cryptocurrencies on the market today, ranging from utility tokens to governance tokens to meme tokens. 

Cryptocurrencies are defined as using blockchain technology to facilitate and maintain the network. Blockchain ensures that all transactions are recorded in a public ledger for anyone to see and are immutable. They also use cryptography to ensure the security of the network established through an elaborate means of information.

Cryptocurrencies can be traded on the following platforms, each incurring its own fees:

• peer-to-peer exchanges, where cryptocurrencies are directly traded between two users.
• Decentralised exchanges, largely unregulated exchanges where there is no central authority.
• Centralised exchanges, operated as a business with an entity in charge and managing operations as well as regulatory obligations.

Cryptocurrencies are largely considered to be "digital commodities" around the world, however, most countries are in the process of building a legal framework to better identify and regulate the new asset class. Still, cryptocurrencies have become a widely popular investment vehicle for both retail and institutional investors. 

Do you have to pay taxes on cryptocurrency?

As is the case with profits gained from any investment, individuals are required to pay taxes on their crypto earnings. While this remains largely unregulated, most countries have created a legal framework that requires users to pay on any profits made. These levies are then paid to the government and contribute to the functioning of the country. The onus lies on the individual to establish what these laws are and adhere to them.

What are the difference between crypto vs stocks

Below we flesh out the differences between these two financial products to build a better understanding of the two. We'll be looking at:

Ownership 

Arguably the biggest difference between crypto and stocks is the ownership rights. Stock provides the holder with ownership rights vehicle cryptocurrency typically doesn't (in the traditional financial ownership sense at least). 

Cryptocurrencies are designed in such a way that their decentralised nature ensures that no one owns the network. Some cryptocurrencies provide governance rights that allow the holders to vote on network changes and have a say in the development of the project. 

Risk vs reward 

The cryptocurrency market is renowned for being more volatile providing considerably higher risks and rewards when compared to the stock markets. 

In a 5 year comparison, at the time of writing, NASDAQ has seen 167% growth while Bitcoin has seen 3,574% growth. 

Liquidity

Stock markets typically hold more liquidity as most stocks can be traded across exchanges and quickly converted to cash. Cryptocurrencies, particularly the smaller capped coins, hold less liquidity, although the bigger ones like Bitcoin and Ethereum can easily be traded on most exchanges. Bigger crypto exchanges have more liquidity due to the higher trade volumes on the platform. 

Regulation

Another big difference between crypto and stocks is the regulation aspect. While all stock exchanges have at least one government entity regulating all activity on the platforms, cryptocurrency is largely unregulated around the world.

Regulation in the crypto space is a developing topic as many countries are working to legally define the asset and implement it into their financial system. Having said that, most centralised exchanges are regulated, complying with laws in the countries in which they operate. For safe crypto trading ensure the platform you're using is regulated.

Investment reasons

While both stocks and cryptocurrencies are largely invested in for profit-seeking reasons, the alternative motivators vary substantially. Some investors also invest in stocks due to the initiatives that the company supports. 

Cryptocurrencies on the other hand offer several more alternative investment motivators, including:

• Getting involved in the blockchain and dapp space
• Making use of its decentralised nature and lack of centralised authority
• Exploring a more discreet means of transacting and storing value
• Supporting an innovative product that offers a high-impact solution

In conclusion

Stocks are a more popular and regulated investment vehicle while cryptocurrencies offer a higher risk vs reward opportunity. While stocks are considered securities are largely regulated, cryptocurrencies offer higher use case potential and have proven to have higher ROIs.

‍

If you’re thinking about incorporating crypto into your business or looking to better understand how digital currencies are infiltrating the business world, you’ll find everything you need to know on the topic below. Looking at the benefits these digital currencies can provide, as well as the downsides, we are effectively dissecting the concept of cryptocurrency in a traditional business model.

Each day we move into a more digital space, be it from the way we communicate to the way we pay for goods, there is no denying that the direction we’re headed in is digitally dominated. The evolution of money is taking a similar stride, from gold coins to banknotes to electronic transfers, and now, digital currencies.

Since the advent of Bitcoin, the world’s first cryptocurrency, over a decade ago, the world has embraced the new age payment system (even if it was one sector at a time). From early investors and developers to huge corporations, crypto has and continues to, infiltrate the financial sector. The recent Bitcoin futures ETF approval provides a classic example.

Crypto In Business

Since the global pandemic, Bitcoin (and the cryptocurrency industry) has edged itself into both the mainstream media as well as the corporate world. Following global market crashes, Bitcoin rose from the ashes and soared to reach unprecedented highs months later.

Many corporations looked to shift their company reserves from the devaluing US dollar to Bitcoin, instigating a massive wave of institutional involvement. Many big companies, everyone from PayPal to Wholefoods, started accepting (or facilitating the trade of) Bitcoin, and gradually crypto became less of a taboo in the Financial sector.

By the end of 2020, it is estimated that around 2,300 businesses in the United States had started accepting cryptocurrencies, alongside the 17,000 Bitcoin ATMs available across the country. As more businesses create teams to focus on the benefits of implementing cryptocurrency in their business, we’ve outlined the pros and cons of adopting the revolutionary technology.

The Pros Of Crypto In Business

For those not yet familiar with the benefits of crypto, or perhaps what it could do for companies (especially virtual and e-commerce ones), find the advantages that cryptocurrency can bring below:

• Removes The Middleman

The intent behind cryptocurrency creation was to establish a peer-to-peer payment system that circumvents the need for intermediary banks and financial establishments. This direct transactional approach results in diminished fees, quicker processing times, and a reduction in the often protracted paperwork and administrative formalities. Instead of relying on centralized entities, this payment system relies on a distributed network and a transparent, unchangeable ledger for its operational functionality.

• Fast, Secure Settlements‍

The network can facilitate international transactions in under an hour, for a fraction of the cost that fiat transactions cost. Using encrypted means of facilitating transactions, cryptocurrency networks are much more secure than any traditional bank.

• Increased User Engagement And Conversion Rates

The more payment options a company offers, the bigger the net of potential customers and conversion rates. The same is true for a wider range of currencies. By providing more options for customers to choose from, the wider the net of potential profit grows.

• Growth Potential

Change often leads to growth, particularly in saturated, highly competitive markets. Adopting and supporting crypto in business practices puts the company at the forefront of emerging technology, a space many will want to be as the world gets more digital.

• Lower Transaction Fees

Payment networks are notorious for charging high fees when receiving transactions, however, Bitcoin and other cryptocurrencies typically charge a much lower percentage. Tap has recently opened a channel for companies to conduct crypto business activities, and charges as low as 1.00% fees on transactions for business accounts.  

The Cons Of Crypto In Business

Of course, there is always a downside to everything. Below we look at some of the risks associated with incorporating cryptocurrencies in business.

• Volatility

Cryptocurrencies have become synonymous with volatility, as the markets move to match supply and demand. Each market has been known to go through stages of increased price movement, however, analysts remain certain that while short term volatility is imminent, long term growth is on the cards.

• Consider Your Target Market

Not everyone has jumped on the crypto bandwagon so it is best to assess whether your clientele would be interested in such an option. If your business is catered to a predominantly older demographic then perhaps incorporating crypto as a payment option is not the best move.

• Security Is Your Responsibility

In the past, many people have lost their crypto portfolios due to lost private keys or hacks. With cryptocurrency, the onus lies on the holder to maintain adequate security measures in order to ensure the safety of the funds. Thankfully, Tap’s business section bypasses with cold storage of your cryptocurrencies assets and state of the art security.  

Conclusion

After evaluating the advantages and disadvantages of incorporating cryptocurrency into your business, take a moment to determine if this decision aligns with your company's strategic direction. If you're considering integrating this modern payment system into your business operations, consider Tap as your solution to handle your requirements and provide the necessary infrastructure for the implementation of cryptocurrencies in your business.

Cryptocurrency and blockchain technology are not the easiest topics to understand, especially with fast and ever-growing industries forming beneath them. Even if you have a grasp on the core details, there is still a lot of external factors that come into play. While Bitcoin and other cryptocurrencies hold undeniable value, external factors still hold considerable influence and can affect the financial value of these assets.

When it comes to trading cryptocurrencies, having an understanding of the market can prove incredibly useful, while having an understanding of crypto fundamental analysis can prove to be invaluable for traders, investors, and those curious about sentiment. In order to understand why crypto fundamental analysis is so important, we need to understand what it is.

What is fundamental analysis?

Fundamental analysis can be understood as methods to evaluate the core metrics and proposition of an asset, in this case the world of digital money, cryptocurrencies. Fundamental analysis is more than looking at the price of a cryptocurrency, but rather delving deeper into the external factors that could impact the product, such as macro and micro factors.

Fundamental analysis is about looking at all the available data of a financial asset. This can include countries' sentiment towards the currency, how many people are using the digital cash every day, or even the team behind the project.

The process of fundamental analysis can be started by taking a wider outlook before narrowing it down and focusing on smaller details. You would start by evaluating the projects' market cap and how healthy the ecosystem is in terms of daily buy-in or sales data. You could then look at the projects' marketing approach, the team, and what the public has to say about the token, for an example of strategy.

To put it simply, looking at what the media is saying about Bitcoin would be an in-depth outlook, whereas just looking at the price would be considered more of a broad approach, all these factors work together to create fundamental analysis.

There are three metric areas of analysis that investors generally look at, so let's take a deeper look at those fundamentals.

Fundamental analysis metrics

These are a few of the most common metrics investors look out for, although there are definitely more things to keep in mind. At the basics of fundamental analysis, it is just doing your own research and seeing if a project aligns with what you are looking for, whether that be long-term or short-term.

The three main metrics that people evaluate are on-chain metrics, project metrics, and financial metrics. There are some things within those metrics to be considered:

On-chain metrics

• Transaction count
• Active addresses
• Fees
• Hash rate

Financial metrics

• Market cap
• Liquidity
• Token supply

Project metrics

• Whitepaper
• Tokenomics
• Competitors
• Team

These metrics will help you vet projects you potentially want to invest in or trade. Let's take a look at an example from each one. Starting with project metrics, looking at the team behind a project often shows whether they have the experience or commitment to see a project through a long time period. When it comes to financial metrics, understanding the token supply and the potential it has on the market cap in the future can be greatly rewarding.

Finally, for on-chain metrics, finding out how many active addresses there are within that blockchain can pinpoint whether this chain has a flourishing and healthy ecosystem for buyers and sellers. All points should be taken into consideration to verify your fundamental analysis.

Crypto fundamental analysis Q+A

After covering what fundamental analysis is, how it affects cryptocurrency investing, and what metrics to consider, let's look at some of the frequently asked questions. These are the most commonly asked questions when it comes to cryptocurrency fundamental analysis.

Is there fundamental analysis in crypto?

Yes, as outlined by this article. Fundamental analysis in crypto is very similar to that of more traditional financial assets, just with a few different metrics in place.

How do you analyse crypto?

As already stated, there are three main metrics investors and traders look at: projects metrics, financial metrics, and on-chain metrics. There are more metrics to be considered, but these have been proven to be the most helpful.

What fundamentals affect Bitcoin?

Bitcoin doesn't have much of a focus on project metrics, as it lacks a team and tokenomics for the future. The metrics relating to market cap, token supply, transaction count, active addresses, and fees are still very much important to look at.

Is fundamental or technical analysis better?

That depends on what your goal is, without going into too much detail about technical analysis, most prefer it for short-term reasoning whereas fundamental analysis can be used for short-term and long-term reasoning, although it is much better for the long term.

Does fundamental analysis work?

Yes, it most certainly does when done properly. It's basically just in-depth research of a project to see whether it has the potential to succeed or fail.

Crypto fundamental analysis conclusion

And now you know. These are the basics of fundamental analysis when it comes to cryptocurrency, as vague as they may seem, these are the markers to consider when vetting a project you want to put funds into. Sadly we can not help you vet every project you come across, but we hope this guide will assist you in more confidently doing the analysis yourself.

Every project is different, from its founding date to the project economics, but the above information should help you get a rough idea of whether it is a project you are interested in. In crypto, it always comes down to "DYOR", or do your own research, and crypto fundamental analysis is no different. 

Any crypto trader or investor will know the rigorous, albeit essential, process of completing KYC practices before being able to buy or sell Bitcoin and other cryptocurrencies. In this article, we're debunking the myths and highlighting the reality of why these Know Your Customer processes are necessary, and how it fits in with AML (anti-money laundering) laws.

As cryptocurrency exchanges continue to solidify their position in the greater financial landscape, the need for strict and regulatory practices has increased. Due to the nature of cryptocurrency transactions being pseudonymous, the need to weed out illicit activities is imperative. 

With little regulation in place, the market remains vulnerable to all kinds of criminal activity, from terrorist financing to ransomware attacks. While regulators were scrambling to change this, a whole new industry within the crypto space evolved. From the even more decentralised nature of DeFi to entirely unregulated NFT dealings, both financial regulatory bodies and institutional investors have joined forces to create more structured frameworks to fight blockchain crime. The results have proven to be successful.

With fast-changing landscapes and increasing innovation, regulating the crypto markets comes with a need to match the pace. Considering that the current financial regulatory frameworks were created based on fundamentally different economic principles, regulatory bodies have their hands full when it comes to building and implementing regulations that can support, while not extinguishing, this financial services revolution. Not to mention the laws required from an insurance standpoint.

What is AML in crypto?

Anti-money laundering encompasses a range of regulations, procedures, and laws to stop criminals from disguising illegally obtained funds as legitimate income. These measures were not implemented into big exchanges in the early stages of the crypto timeline, but are rather now making their way into platforms' due diligence processes as per tighter regulations. These generally involve traders confirming their identity before being able to conduct any payments when buying digital assets or executing any crypto transactions. 

As noted in the banking and crypto industries, when individuals or businesses attempt to conceal unlawful earnings this is typically done in three stages: placement, layering, and integration. The placement layer involves the money being deposited on the crypto exchange. 

The layering stage is when the illegitimate funds are mixed with legal funds making it challenging for authorities to keep tabs on them. In the final stage, the laundered money is "cleaned" and returned to the beneficiary. This is how criminals circulate illicit income and manage to launder money undetected.

In the decentralised world of cryptocurrencies keeping tabs on such activities has its own set of challenges. Hence why AML measures and controls are vital to the industry's operations as well as reputation. 

However, as mentioned above, these measures need to be carefully implemented so as not to kill the nature of why people are attracted to cryptocurrencies in the first place (being free from third parties or central authorities). 

The regulations need to respect the decentralised nature of cryptocurrencies while still providing the opportunity for policing should illicit activities be happening, and then needs to be built into the business model of the company providing the crypto services.

The crypto AML red flags

While there are plenty of anonymous means of transacting your crypto, such as privacy-focused cryptocurrencies, there are still several aspects that traditional cryptocurrencies possess that trigger red flags when it comes to AML.

The estimated amount of money laundered in 2021 is $800 billion - $2 trillion, with roughly 50% of money laundering going undetected. According to a Basel System Report, 62% of compliance officers in business crime say that this type of criminal activity is becoming more difficult to spot. With this in mind, here are the top AML red flags that are present across the board: 

• Obscured identity of transaction makers
• Unclear transaction size 
• Obscured geographic location
• Unofficial profiles of parties involved
• Lack of information on the source of funds
• Withdrawing funds from a wallet with no transaction history
• Consecutive high-value transactions

How AML protocols are implemented at crypto exchanges

As crypto exchanges work toward integrating cryptocurrencies into the mainstream financial landscape, they are required to work hand in hand with regulatory bodies. These actions vary around the world, with many countries opting to embrace different methods of imposing AML practices. 

Here is a look at how 5 countries imposed varying rules:

The U.S.

Governed by the Financial Transactions and Reports Analysis Centre (FINTRAC) and Financial Crimes Enforcement Network (FinCEN) the country has strict regulations when it comes to AML and KYC regulations. It continues to work on the legal framework.

South Korea

Following an investigation with crypto exchange Bithumb revealing that $1.45 billion worth of funds were illegally moved through the platform, the country is working on imposing more defined AML and KYC rules.

Singapore

Taking a rare approach to crypto regulation, the financial hub of Asia and a key player in the development of the blockchain and crypto industries, Singapore is choosing to educate people on the technology rather than impose stringent policies. 

Canada

The country recently imposed regulations under the guidance of the FINTRAC unit that mandates the same KYC requirements as traditional financial institutions.

Thailand

The Thai regulatory bodies have implemented regulations to keep foreign investors out of their local markets by upgrading their KYC regulations with in-person verification and microchips in their ID cards. 

Today, most modern nations have implemented rules that demand businesses to use sophisticated technologies to prevent crypto from being utilised for unlawful activities and protect their investors.

Cryptocurrency compliance is an industry that has its own set of rules. Every year, businesses must demonstrate greater levels of security and minimise risks in order to stay compliant. KYC/KYB/AML processes are taken very seriously by reputable cryptocurrency firms. They might be subject to huge penalties if they fail to comply with this requirement.

In conclusion:  AML is here to stay

While these new financial transparency measures might go against the very nature of cryptocurrencies, it is important to ensure the security of crypto users, and for the overall adoption of the industry. They also play an imperative role if crypto wants to live alongside fiat currencies in the global financial landscape.

The introduction of new global regulations contributes to the growth of the cryptocurrency industry. Despite a widespread misconception, digital currencies are traceable and do not account for most financial crimes.

Reputable cryptocurrency platforms collaborate with law enforcement to assist in the prevention of illegal activities. They also safeguard their users from fraud and other potential risks.

‍