3 Common Compliance and Regulatory Pitfalls to Watch for in 2020

To stay ahead, VASPs must have a clear understanding of their regulatory obligations and how this impacts their business viability in any given market.

Avoiding the three most common pitfalls of compliance can shorten a company's time to market, create barriers to entry for competition, and protect its reputation.

Pitfall 1: KYC means verifying users' identity during onboardingThis is the biggest misconception that plagues most digital securities platforms, exchanges and other virtual asset service providers in the market today.

It is important to understand the regulatory obligations in every market where you serve even a single user.

Pitfall 3: Build it once and we are good to goWhile this is theoretically possible in very small markets, in practice, a business' activities are most likely subject to multiple regulators in each market it serves.

New trends in one market can quickly become the standard in others.

Key regulatory shifts in 2020While not a definitive list, here are some of the key regulatory shifts to watch closely in 2020:.Virtual asset service providersLast year, the FATF published new guidance that included definitions of both virtual assets and virtual asset service providers.

Digital securitiesCommunications: How a VASP markets its products and services or how an issuer markets its token is subject to myriad regulatory requirements.

Secondary marketsIn the U.S., Open Finance Network is closing operations largely due to lack of a market.

For private capital markets, the platforms that move beyond the false dichotomy of privacy vs. security and strike a balance between risk management and respecting their user's privacy, data and assets will own the market.