The cryptocurrency eco system – a new frontier in consumer protection

The cryptocurrency eco system – a new frontier in consumer protection

by Jake van der Laan, Director, Information Technology and Regulatory Informatics and Director Enforcement, Financial and Consumer Services Commission

Can you please tell the Risk Insights readers a little bit about yourself, your experiences and what your current professional focus is?

My primary professional focus is understanding the impacts of technological change on consumer behaviour and the risks these changes bring. This understanding will, I hope, in turn inform better regulation and protection of consumers and our markets.

What, for you, are the benefits of attending a conference like the Fraud and Financial Crime USA Congress and what can attendees expect to learn from your session?

Taking time out of the day-to-day work to look at the bigger picture as well as learn to understand some of the new technologies touted to drive changes (like blockchain and artificial intelligence), is very important. Making new connections with others doing similar work is also a wonderful benefit of these conferences.

You will be joined by HSBC, Goldman Sachs and the FBI, in your opinion, what are the security threats derived from the utilization of cryptocurrency?

Much of the cryptocurrency space operates without meaningful regulation and as a result consumers are at risk.  With proper regulation comes stability. I will be interested to hear the other panelists’ perspectives on how to stabilize this space.

What are the implications of increased exposure to digital currency exchanges?

There are now well in excess of 200 digital asset market places worldwide.  We have seen evidence of significant manipulation on many of these market places.  Consumers need to be very cautious about dealing with these market places and should enquire where and how they are regulated.  They should also clearly understand their rights when creating an account with a crypto currency market place. Many have terms and conditions that do not weigh in favour of the consumer.

What are the risks posed by the ecosystem and how can financial institutions overcome this?

One of the primary concerns within the crypto ecosystem is the many conflicts of interest that exist. All the players are in it to make money and without some regulatory controls (record keeping, audit trails and transparency, an obligation to put the consumer’s interests first, etc.) those motivations don’t align well with those of the consumer.

How do you see the impact of Fraud and Financial Crime evolving over the next 6-12 months?

Technology is going to continue to be the main driver for change. I think blockchain will lose some of its allure. I think the next hype cycle will focus around AI and in the financial space in particular, on robo-advisers and similar applications of that technology.

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X-Tech 2019