Addressing Trust Issues in the Cryptocurrency Industry: A Proposal for Decentralized Oversight and Global Standards
Cryptocurrency Industry Urged to Adopt Decentralized Oversight to Combat Fraud and Money Laundering
In a world where headlines about cryptocurrency often involve fraud, terrorist financing, and money laundering, one finance expert is proposing a solution to address the trust issues plaguing the industry.
Benjamin Van Vliet, associate professor of finance at Illinois Institute of Technology’s Stuart School of Business, has published a research paper titled “A Model of Decentralized Oversight for the Digital Asset Industry with an Example Anti-Money Laundering/Know-Your Customer Standard” in the Journal of Payments Strategy and Systems. In this paper, Van Vliet suggests that the cryptocurrency industry should adopt decentralized oversight through globally recognized standards to combat bad actors and improve trust within the industry.
Traditionally, financial institutions establish trust by complying with rules-based regulations set by national governments. However, cryptocurrency operates on a global, decentralized scale, making it challenging to navigate the regulatory landscape of 150 different countries.
Van Vliet proposes that the industry should follow the lead of other sectors and implement International Organization for Standardization (ISO) management standards. These industry-specific standards would provide a framework for companies to follow, ensuring compliance with ethical and management norms.
Furthermore, Van Vliet presents a model for verifying compliance with anti-money laundering and know-your-customer processes using a public blockchain. He hopes that his paper will spark discussion within the finance industry and among government regulators, particularly in addressing the urgent issue of cryptocurrency being used to finance terrorism.
With over a million companies worldwide adhering to ISO management standards in various industries, Van Vliet believes that implementing similar standards in the cryptocurrency industry could facilitate global trade and establish trust across borders. By adopting decentralized oversight through industry-defined standards, the cryptocurrency industry may be able to combat fraud and money laundering effectively.
As Van Vliet states, “Let’s see if we can get that standard up and running and see if it works.” The future of the cryptocurrency industry may depend on embracing decentralized oversight to ensure trust and integrity in financial transactions.
