All money handlers, something crypto exchangers too often forget they are, store highly sensitive data involving the exchange of assets and monies and were always going to be subject to government and zone regulations eventually. As an entity, they could even deal with insider trading incidents and accusations.

These areas of concern are subject to regulation from entities like the Securities Exchanges Committee (SEC) and the Financial Industry Regulatory Authority (FINRA). Blockchain itself is not subject to these because their settlement function does not meet the requirements of a clearly defined individual exchange through the storing of asset information and holders (but this year will begin a higher number of regulatory laws regarding blockchain), however, exchanges do have ESI (electronically stored information) meeting those standers. FINRA and SEC regulations are already in place and primarily concern communication.

As Craig Wright puts it, FINRA within the US has regulations ranging from tweets and text messages being verifiable forms of communication that therefore need to be preserved and stored (FINRA 11-32) to business communications needing to be stored and preserved even if made from personal devices like a home computer or a personal cell phone (FINRA 11-39).

Unfortunately for anyone who finds themselves suddenly caught up in an enforcement crackdown, rules from US FINRA apply to more than US exchanges. Known as the “Long Arm” provisions, the United States regulations include any exchange using a .com domain, with network communications that pass through US servers at any point in time, hold and or trades against USD and its equivalents, or even accept USD at all. Since USD has been the most or one of the most popularly accepted forms of money worldwide for many decades, this ruling truly has a long arm.

Crypto exchanges will have to comply with this ruling by archiving all necessary ESI in a fast manner with an unchangeable archiving system. As a result, anonymous coins are always in criminal breach when traded because individuals are not tied to the transaction. Those regulations require a record that ties someone or a company to the transaction in a digital record that is easily retrievable and read by the proper authorities if and when necessary.

More information on such regulations can be read here:

https://www.finra.org/sites/default/files/SEA.Rule_.17a-4.Interpretations_0_0.pdf

Bitcoin (BTC), Ethereum (ETH), XRP (Ripple), and EOS Price Analysis Watch (Feb 7th)

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