Cryptocustody and regulation are key aspects to safely and robustly allow the advancement and adoption of cryptocurrencies, to learn a little more about what these aspects contain in the crypto ecosystem and their perspectives for this 2023, we have talked Enrique Palacios Rojo, Chief Compliance Officer (CCO) or Head of Regulatory Compliance at Onyze, the Spanish crypto custodian.
In the first place, Palacios has stated that last year at the regulatory level it was confirmed for VASPs (crypto providers) that applying controls and procedures for risk management to prevent money laundering is not an option but an obligation.
According to him, with the cases of Terra, Celsius and FTX the need for regulation to control deficient market practices has been revealed, therefore this will lead to 2023 with more rigorous measures for the granting of licensesgreater transparency in the management of user balances and an improvement in the governance of crypto providers, which will result in greater consumer protection.
“At the business level, in 2023 the key role of crypto custody will be confirmed so that banks can offer crypto to their users and a fundamental piece in the tokenization of traditional financial assets”he explained.
In addition, palaces pointed out that the recent regulatory advances in Spain and Europe with MICA at the forefrontbut with circulars on the publicity of crypto assets, or the Pilot Regime that comes into force in March of this year, they will promote credibility and generate the necessary framework of trust for the crypto industry so that other financial entities can offer cryptocurrency services with full guarantee.
“A single license will be offered to be able to operate throughout the EU and to be able to compete on equal terms in more advanced jurisdictions such as Germany and France”he detailed.
On the other hand, regarding Spain, he pointed out that very innovative steps had been taken betting on crypto projects in test environments such as the regulatory Sandbox, with Onyze playing a very active role. He also said that the CNMV had been a pioneer in the world in regulating the advertising of crypto assets.
“There is always room for improvement, if we look at some initiatives in this regard in European countries such as Germany, which allows their pension funds and insurers to legally allocate up to 20% of their assets to cryptocurrencies”Palacios said.
The importance of cybersecurity and crypto-custody
Regarding these points, Palacios was asked if in terms of security the cryptocurrency ecosystem lacked something to mature in Europe, and he replied that With the advent of the aforementioned regulations, in addition to others such as the NIS2 directive or the EU Cyber Resilience Act, they will be forced to adopt good practices in relation to cybersecurity, not only by custodians but by other crypto asset providers.
For his part, he considers that cybersecurity maturity within the industry is key, and more so in a crypto custodian: “In a custodian it is key, since we are the guarantor of last resort in this regard. MICA brings strong guidelines on contingency plans as well as the DORA regulation in terms of cyber-resilience also obliges crypto actors to comply with its demands”he commented.
That being said, he also talked about the Defi hacks seen in the last two years and explained the following: “The trend is for Defi protocols to deploy more robust cybersecurity measures, implementing both audits in their smart contracts and improvements in the design of their tokenomics.”
“The important thing is that both frequency and amounts are reduced, as well as increasing the returns of hacked amounts, which in 2022 has been 12% of the total stolen in Defi”Palacios added.
However, he shared some ways that he believes security can be improved and strengthened by minimizing the risks of hacking into cryptocurrency wallets or exchange accounts.
“At the level of unhosted wallets, access permissions to Defi Dapps should be improved, as well as anti-fraud measures such as phishing. In the case of a custodian like Onyze, continue to strengthen our defense lines, security infrastructures, and management protocols and key ceremonies.”said.
“The diversification in different cold vaults and the management of the balances maintained in the warm wallets is essential”he emphasized.
Finally, Palacios also shared that It was not a surprise for him that the Spanish Government will monitor Bitcoin transactions with software that they hoped to develop, as he explained that for the Government to strengthen itself in this aspect was a reflection of reality and the growing demand for this type of asset.
“In this sense, we use our own systems combined with two tools from expert providers in blockchain analytics for the traceability of crypto operations”he concluded.
Disclaimer: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information presented here should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
It may interest you:
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the entire amount invested may be lost. The services or products offered are not directed or accessible to investors in Spain.