October 13, 2015

Cheryl Gurz: Regulation and compliance an unavoidable reality for virtual currencies and blockchain technology

Cheryl Gurz Regulation and compliance an unavoidable reality for virtual currencies and blockchain technology

Cheryl Gurz, managing director and emerging payments technology segment manager for BNY Mellon's Treasury Services business, participated in the Compliance Forum session at Sibos on Wednesday, October 14. Gurz noted that while virtual currencies have become a financial services reality, they represent a minuscule share of the currencies involved in global transactions.

Even if that share remains small, enthusiasts predict more widespread use of the blockchain technology that supports virtual currencies. Along with that increased use, many claim, will come a major change in the current regulatory and compliance requirements, thanks to the accessibility of transparency of data posted to the ledgers that comprise the blockchain.

Commenting on the topic, Gurz says: "The world's sending a different message and the message can be summarized in three words: 'not so fast.' In the real world, blockchain-based banking services will ultimately be susceptible to the same types of concerns that account for the regulatory and compliance environment in which today's banking industry operates.

"The emergence of virtual currencies has been a remarkable phenomenon. One of the reasons they've attracted so much attention is that they are built on blockchain technology, which provides an unprecedented level of transparency," adds Gurz.

"But it's important to recognize that investment and banking activity takes place in layers, and new technologies aren't going to make the regulatory and compliance concerns present at each layer go away. We're likely to see the roles of service providers at the various layers change as innovation makes information more accessible and transparent. But the ultimate drivers for regulatory and compliance activity are rooted in public policy and political considerations that will persist regardless of the direction new technology takes," says Gurz.