The famous success story of Bitcoin has made other digital currencies to gain traction amongst investors. As a result, there has been a massive proliferation of peer-to-peer trading platforms, created by theses cryptocurrencies. Presently, the market is dominated by centralized exchanges, though OTC platforms are striving to compete with these established giants. One particular OTC that was hugely promising is CoinTouch, but its dreams of making it were cut short by the implementation of new regulations across Europe.
The up and coming venture was not necessarily a force within the industry, but it offered a viable alternative to centralized exchanges. Essentially, it facilitated the peer-to-peer trading of virtual currencies, specifically Bitcoin. Moreover, the platform was favorable to small-scale investors, since it did not charge any transaction conducted over its network. Unluckily, the freshly passed GDPR regulations have spelled doom to this project.
CoinTouch heavily relied on social media platforms to spread awareness on digital currencies. In this regard, Facebook and Google users could share their trading history on their newsfeeds. Furthermore, users could establish peer-to-peer connections on these social platforms. This substantially simplified the verification of user’s identities, since the info was easily obtainable form their respective social media profiles. However, this business model does not bode well with the newly introduced GDPR regulations. Reportedly, these laws could have an adverse ripple effect on the entire cryptocurrency trading sector.
CoinTouch Closes Due To Unfavorable Regulations
The new GDPR rules will most likely affect websites dealing with cryptocurrencies. Apparently, the regulatory body proposes penalties amounting to either 4% of the website’s turnover or €20 million if the site is non-compliant. Under the new law, all platforms are required to enforce Know Your Customer (KYC) procedures, an aspect that CoinTouch did not implement. Therefore, the business had to abruptly close shop or risk losing millions for violation of laws.
In response to this development, CoinTouch’s proprietor expressed disappointment in the EU law, saying that it was targeting the upcoming trading platforms. He further added that the GDPR regulations favor social media giants such as Twitter and Facebook, since they have the financial firepower required to mount a legal challenge against these stringent laws. He concluded by citing the detrimental effects of other unfavorable laws, including the EU VAT Regulation and the EU Cookie Law.
Irrefutably, the EU is doing the right thing by trying to eliminate fraud. Nonetheless, the enforcement of disadvantageous protocols such as the GDPR is certainly not a recommendable method of achieving a criminal-free trading environment.