Cryptoassets rulings are a welcome concern for agents
First AML’s revenue chief Bion Behdin says new rules for regulating crypto and marketing cryptoassets can provide lessons for estate agents.
Last year Portugal saw its first sale of a property in crypto currency. For those involved, it was a landmark moment after nearly a year of preparation.
While the currency has had a very limited use in the UK real estate market so far, the acceptance of its use could grow as regulation does – the House of Lords has just approved a new bill recognising cryptocurrencies as a regulated activity.
It follows on from new measures that the Financial Conduct Authority (FCA) has introduced for marketing cryptoassets, in another move to get to grips with a mainly unregulated and unpredictable world.
The new FCA legislation is designed to ensure that those “who buy crypto understand the risk” and have the necessary knowledge and experience to invest in it.
“Those firms promoting cryptoassets are also obliged to ‘put in place clear risk warnings and ensure adverts are clear, fair and not misleading.’”
ESTATE AGENCY
So what does this have to do with an estate agency?
Any attempts to regulate such a volatile market can provide lessons for real estate in adopting processes to manage a world highly susceptible to money laundering. And these frameworks should be embraced.
While it may not be directly used in the actual transaction, crypto can still be converted into a fiat currency and then placed into assets and estate.
And while not directly taking on money laundering alone, the new regulations are an example of the ways regulatory bodies are attempting to create more transparency and educate the public around the risks associated with crypto. This includes introducing a cooling-off period for first time investors.
Investment in cryptoassets not only carries the personal risk of financial losses but places these investors in a world where money launderers and bad actors may try to clean their illicit gains through new investor naivety in the form of unsolicited offers, promising unrealistic returns, or requesting participation in questionable schemes.
The technology protects anonymity, so investors may not even know who they are interacting with let alone what is considered ‘normal practice.’
And its ability to facilitate cross-border transactions undetected means that regulating it effectively becomes incredibly difficult.
These are all ploys that money launderers seek to exploit in the real world of real estate. And they are areas that can be enhanced in the crypto world, especially when it comes to cross-border deals.
CONSUMNER SAFEGUARDS
Any new regulation is always welcome, as long as it is consistently carried out and applied. Commenting on the new measures, Su Carpenter, Director of Operations at the trade body CryptoUK expressed concern “that the changes could encourage unauthorised firms to operate from outside of the UK, creating a competitive disadvantage for UK-based organisations and also potentially undermining consumer safeguards.”
But rather than acting as an argument against the regulation, this should be viewed as a point to encourage greater cooperation between agencies, jurisdictions and countries.
That way, they can begin to develop a more universal framework and understanding for how best to regulate the crypto world.
There’s a long way to go. But the more ways we can find to responsibly regulate crypto, and the greater transparency we can create, the better we can safely manage a seemingly unregulated world.
These new measures mark another positive step in doing just this. And with or without crypto, they act as an example for managing real estate dealings.
Bion Behdin is Chief Revenue Officer of First AML.