- XRPL Labs, which is supported by Ripple, works on solution to improve compliance with European regulations by crypto projects.
- The founder, Wietse Wind, sees an increasing demand from European governments to implement more regulation and supervision of cryptocurrencies.
The relationship between crypto projects and regulators is turbulent, at least in countries such as the United States and the European Union. The regulations are strict and recent events indicate that the trend will continue. One company that wants to change this and shows the strongest commitment is Ripple.
The company is addressing the issue from different angles. On the one hand, Ripple promotes the education in blockchain technology, while on the other, it has established subsidiaries that work closely with regulators to promote a solid regulatory framework. At this point, one of the developers and employees wants to implement a solution that enables crypto projects to start their activities quickly and in compliance with the law.
The Internet as a service for crypto projects
The founder of XRPL Labs, Wietse Wind, expressed his concern in a new blog post about the new rules already being implemented in the European Union. He used the Netherlands as an example.
From 10 January next year, the Dutch central bank will start regulating crypto companies. From then on, they will have to register, undergo audits and will be subject to stricter supervision. In addition, they must follow the Know Your Customer guidelines and report any “suspicious transaction” to the Financial Intelligence Unit:
This makes perfect sense to me, and I am sure regulation is a good thing to a growing and maturing ecosystem, making its way to more and more use cases and users. However: think about all those new & innovative use cases. Think about micropayments. Think about streaming payments, the internet of value.
At the same time Wind stated that the regulations will have a negative impact on new projects and innovation. Start-ups would have to go through a long approval process and meet the high demands of regulators. The cost of starting a project related to cryptocurrencies, even if small, would be too high. To solve this problem, Wind proposed to create a compliance company. Thus a project or startup could contract its services and the company would handle all the demands of the regulator.
Once onboarded, the customer will be redirected back to the crypto platform/app with a token, granting the crypto platform/app to use our API to pre-authorize transactions, check for customer account status, customer limits, etc. AML / risk profile related questions will even be interaction between “the company” and the customer.
Wind said that the process would be similar to entering a service with a social network, such as Twitter or Facebook, but “applied to cryptocurrencies”.
Ripple initiatives and increased regulations in the European Union
As mentioned above, Ripple is working to promote a more favourable regulation and legal framework for cryptocurrencies and related projects. James Wallis and Alenka Grealish recently stated that adoption of blockchain is growing worldwide.
Wind’s project is interesting. However, he said it is still in its first phase of development. In the next stages the Wind team will review the regulatory and legal aspect of the project. Until then, users and crypto projects in some European Union countries will continue to find a more complicated scenario.
The price of the XRP is at $0.19 USD, showing a downtrend (8.19%) in the last 24 hours.