utah.bank 10 In today’s financial regulatory environment, two of the hottest topics are cryptocurrency and cybersecurity. Within the past year, multiple agencies have released various regulations and guidance regarding cryptocurrency, banking, and cybersecurity, both individually and collectively. As my teachers would say, if something is said more than once, it is probably important, and you will likely see the material again. Similarly, cryptocurrency and cybersecurity threats are likely here to stay, and regulators are preparing for those implications. Banks are now put on the spot to adapt to the market shift and the regulations that will surely follow. What is cryptocurrency? The Merriam-Webster’s dictionary defines cryptocurrency as “any form of currency that only exists digitally, that usually has no central issuing or regulating authority but instead uses a decentralized system to record transactions and manage the issuance of new units, and that relies on cryptography to prevent counterfeiting and fraudulent transactions.” How does cryptocurrency relate to banking? For bankers, the question of how cryptocurrency relates to banking is pressing and hard to answer. Crypto-currency usage is typically stereo-typed between two different groups: underground-market transactions (i.e., drug market or selling a kidney online) and GameStop/Reddit kids who almost crashed the stock market in 2021. Volatility and illicit activity are two of the biggest regulatory fears for bankers, so how do banking and cryptocurrency relate? First, who are the individuals actually investing or using cryptocurrency? According to a November 2021 article from Pew Research, 16% of Americans have used or are invested in cryptocurrency. Of CRYPTOCURRENCY: SAFE OR “SUS”? By Carol Ann Warren, JD, Associate General Counsel, Compliance Alliance
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