Over the past few years, technology disruption has been taking place at breakneck speeds across a range of industries. From the advent of the Internet to our current landscape that has brought about the likes of Uber in the transportation space, Airbnb in the lodging industry and Spotify in the music sphere, it holds true that the best way to predict the future is to create it.
The payments industry is next up with the growing adoption of digital currencies, such as Bitcoin (XBT), Ethereum (ETH) and the latest newcomer, COTI (COTI). While current digital currencies come with a high degree of regulatory uncertainty, a major shift is underway to ensure legal frameworks are in place for such payment methods to be accepted on a global scale.
In the early days of the Internet, libertarian views held that Cyberspace would always be a decentralized force free of any governmental intervention. Such utopian sentiments, however, were quickly disillusioned as countries began to sanction Internet activity throughout their local jurisdictions. Over the past 20 years, the Internet has become a highly regulated space with numerous control points subjected to legal intervention. With the emergence of blockchain technology to support digital currencies, a new wave calling for a departure from legal systems has began to surface once again. Nevertheless, history tends to repeat itself, and the only way digital currencies can really begin to break ground and gain mainstream acceptance is if they work within the bounds of the law.
This is where the Currency of the Internet (COTI) comes into play. COTI is a new generation payments network that reconciles traditional payments systems with digital currencies, incorporating their strengths while finding workarounds to their limitations. For digital currencies based on blockchain technology, the greatest limitation is the absence of regulatory standards.
If designed properly, digital currency-specific regulation will be highly favourable for cryptocurrency innovation, not a limiting factor. COTI has actively taken the position of contributing to the regulatory dialogue by pursuing license authorisations globally with respect to payments, money services, its native currency exchange and e-wallet services, as well as implementing AML (anti-money laundering) and KYC (Know your Customer) procedures.
Payments and money services
Such licenses cover the provision of merchant processing solutions, enabling COTI-powered merchants to accept payments in digital and fiat currencies.
Exchange and e-wallet services
Such licenses cover the provision of exchange and wallet functionality, enabling COTI to provide individuals and merchants with the ability to hold, and exchange, digital and fiat currencies.
AML and KYC procedures
COTI is inherently not conducive to money-laundering, as any user of COTI’s wallet, exchange or processing solutions must go through strict onboarding procedures. Notwithstanding its commitment to AML and KYC, COTI is committed to protecting user privacy, and has appropriate consumer data protection standards in place.
COTI is not a security
As it concerns COTI’s native currency, the COTI, it does not classify as a security according to legal experts from reputable law firms in several key jurisdictions. Moreover, the sale of the COTI to members of the public does not does not constitute a breach to the relevant regulations.
The payments industry is ripe for transformation, making up 29% of all banking revenue which will be $1.4 trillion annually as of 2025. Today’s payment solutions, however, have significant trust issues between consumers and merchants. This major shortcoming can be addressed through a universally regulated payments system that is transparent, secure and trusted, thus paving the way for friction-free commerce where all parties stand to benefit.
Echoing the Internet of the mid-1990s, digital currencies will benefit from greater regulatory clarity
In the early days of the Internet, some early adopters held the view that ‘Cyberspace’, as it was often referred to then, would always be a decentralized force free of any governmental intervention. This sentiment was perhaps best exemplified in ‘A Declaration of the Independence of Cyberspace’, a paper distributed by the Electronic Frontier Foundation (EFF) in response to the United States Government’s passing into law of the Telecommunications Act of 1996. In the paper, John Perry Barlow, a founding member of EFF, addressed ‘Governments of the Industrial World’ by stating the following: “I come from Cyberspace, the new home of Mind. On behalf of the future, I ask you of the past to leave us alone. You are not welcome among us. You have no sovereignty where we gather.”
Perhaps unsurprisingly, these utopian – and, in hindsight, entertaining – sentiments were quickly dispelled with as governments began to sanction Internet activity in their respective jurisdictions. Over the past 20 years, the Internet has become a highly regulated space with numerous control points subjected to legal intervention. The high degree of regulation has coincided with the Internet achieving mainstream adoption, yielding immeasurable economic and societal benefits for the world at large.
Since the emergence of blockchain-based digital currencies, a new wave calling for a departure from legal systems began to surface once again, echoing the sentiments of the Internet’s early adopters in the mid-1990s. The anarchical streak that has long characterised some segments of the digital currency community is bound to be dispelled with sooner or later, in favour of a new breed of digital currency initiatives that see and help define, appropriate regulatory oversight.
COTI is one such initiative. The COTI team has adopted the position that digital currencies will yield the greatest benefits to society if digital currency initiatives – whether exchanges, wallets, or token issuers – contribute actively to help shape digital currency-specific regulatory frameworks. Moreover, COTI believes that digital currency initiatives with an interest in seeing digital currencies achieve mainstream levels of option should pre-emptively implement AML (anti-money laundering) and KYC (Know your Customer) procedures at banking industry standards.
COTI has entered discussions with several regulators around the world with a view to contributing to the dialogue surrounding the current and future state of digital currency regulations. More stringent regulation of digital currencies is inevitable, so the COTI team aims to help ensure that new regulations are designed in such a way that they can support – rather than constrain – innovation. Clear, well-designed regulatory frameworks will be a catalyst for the mainstream adoption of digital currencies.