In times of market instability, regulation helps to restore public confidence in cryptocurrency.
Digital assets faced tremendous obstacles in 2022 as the sector reached all-time highs and lows. Bitcoin peaked at over US$68,000 a little more than a year ago, but it’s selling for less than US$18,000, demonstrating the market’s volatility. The abrupt and prolonged drop in cryptocurrency values in May 2022 practically collapsed the crypto market. During uncertainty, the market value for decentralized ledger technologies dropped by more than US$2 trillion.
Data privacy regulations have gained prominence as people increasingly worry about how businesses gather, store, and use their personal information. The European Union’s General Data Protection Regulation (GDPR) and the California Consumers Privacy Act (CCPA) are examples of data protection rules established to address these issues.
Digital wallets like PayPal and cryptocurrency are two industries where data privacy standards are going to significantly impact their future. In contrast to PayPal, which processes millions of dollars in daily payments, cryptocurrency transactions are recorded and verified using blockchain technology.
Let’s discuss the significance of data protection regulations in determining the future of PayPal and cryptocurrency. How these policies impact how corporations gather and use user data? How difficult it’s for businesses, especially in crypto, to adhere to data protection laws?
PayPal and data protection regulations
PayPal is the most popular online payment service. It enables customers to buy and sell across borders. As a payment platform, PayPal must adhere to several data protection standards to preserve the security and user’s personal and financial information confidentiality.
The GDPR, enacted in 2018, is one of the most important data protection regulations. Companies like PayPal that deal with the personal information of EU residents are subject to the GDPR. According to the rule, companies must get explicit permission from users before gathering and handling personal data such as their
- Payment details
PayPal has taken several data protection measures following the GDPR, such as
- Protecting sensitive information
- Introducing access limits
- Giving users more access to their personal information
PayPal, for example, allows users to examine and amend their personal information at any time, such as their email account and billing address.
The CCPA, which was passed in California in 2020, is another crucial data protection policy. It applies to any entity that gathers personal information from California citizens, including PayPal. The rule compels businesses to allow users to determine what personal details are being collected about them and to request that their personal information be deleted.
PayPal has changed its privacy rules to to adhere to the CCPA, like:
- Greater access to data gathering and sharing methods
- Customers can opt out of some forms of data sharing and request that their personal information be deleted.
Crypto and data protection regulations
Crypto uses blockchain technology for its monetary exchanges. Because it’s a decentralized ledger, blockchain makes it very difficult to edit or meddle with the records of network transactions. While blockchain delivers a significant level of safety, it also poses new data protection issues.
The blockchain’s decentralized structure presents a difficulty for cryptographic data protection. In contrast to centralized systems, in which information is held in only one central location, blockchain information is spread across many computers. This makes applying typical data protection methods, such as encrypting and access controls, more challenging.
The anonymity of transactions constitutes an additional obstacle to data security in cryptography. Despite the openness and verifiability of blockchain transactions, identifying the persons involved is frequently concealed or disguised. This makes obtaining express agreement from individuals before gathering and using their data more difficult.
To overcome these issues, cryptocurrency enterprises must adhere to data privacy regulations such as the GDPR and CCPA. On the other hand, compliance with these standards in the context of crypto necessitates a different strategy than in traditional centralized systems.
DSAR under CCPA and GDPR compliance
Timely and precise DSAR delivery improves brand image while assuring compliance with CCPA laws. However, other estimates place the cost of fulfilling each DSAR in the hundreds because it requires
- obtaining data from several systems
- consolidating it in one location
- looking through data records
- combining it into a detailed report
Additionally, satisfying each DSAR often takes weeks. Here is where an automation-based solution proves to be a powerful weapon. Do you want to know what is DSAR?
DSARs empower consumers with exceptional control over the details maintained by companies, including:
- access to data
- requests for information on stored data
- requests for information on the data protections provided by the organization
Under the CCPA, customers seek DSARs for free twice a year.
Are you interested in purchasing cryptocurrency?
Customers frequently inquire about how to buy cryptocurrency like Ethereum using PayPal? Technically, it was conceivable, but the process was complicated and ambiguous. Fortunately, recent modifications have made acquiring Bitcoin and other tokens relatively simple. The entire procedure to buy Ethereum with PayPal is quick and easy.
Why is it necessary to regulate PayPal and cryptocurrencies?
The market needs regulation to make it a safer environment for everyone and to safeguard consumers’ financial holdings. This instills more trust in individuals trading on the marketplace and enhances the industry’s appeal. Also, it encourages a more extensive adoption of crypto products.
The implementation of precise regulatory advice makes nations more crypto-friendly and fosters the development of new businesses. This stimulates economic expansion in the host jurisdictions. Companies’ top executives recognize the benefits of opening shops in these highly regulated markets. They do business in a predictable and secure legal framework governed by regulations safeguarding consumers.
Restoring public faith
With the present financial slump, the necessity for regulation of digital assets has become increasingly evident. During 2022, these large exchanges failed:
- Voyager Digital
This highlights the dangers of trading in the digital asset markets. Customers are locked out of their accounts or unable to withdraw cash. They have lost crypto assets worth billions of dollars due to the lack of regulation in the industry. Undoubtedly, past errors have affected the public’s perception of the cryptocurrency business.
To restore confidence, it’s vital to implement regulations that safeguard people’s investments against a company’s lack of proper corporate governance or wrongdoings. Creating efficient regulatory structures helps restore public confidence.
Financial risk is unquestionably a significant barrier impeding the mainstream adoption of digital assets. Although regulation can’t eliminate investment risk, it assures investors that it is handled fairly. The DLT Regulatory Framework Gibraltar implemented in 2018 has essential components such as market integrity rules and robust mandatory controls in segregating client assets.
Global advances in regulation
While cryptocurrency markets are still in their relative infancy, they are naturally difficult to govern. People within and outside the sector have different ideas about how regulation has to look. Also, even if it continues, it has to add another layer of difficulty to the situation. Yet, if crypto usage is to become commonplace, its governance must be a priority. The broad acceptance of digital assets is anticipated to provide the sector with much-needed stability.
Politicians and regulators have applauded governance implementation in the virtual currency industry. In 2018, Gibraltar implemented well-thought-out regulations to accommodate all market participants. In 2022, the European Union adopted the final legislative language of the Markets in Crypto-Assets (MiCA) Regulation proposal. It promotes technological innovation inside the European Union and safeguards consumers from unlawful financial loss.
Likewise, in 2022, U.S. President Joseph Biden issued an executive order to examine the dangers and advantages related to cryptocurrency. The recent launch of the Comprehensive Framework for Crypto Regulation and Development intends to change the crypto assets environment in the US. Clear frameworks, such as those suggested for implementation in the U.S. and the E.U., demonstrate leadership and, in turn, inspire other countries to govern blockchain technology.
Clear and decisive regulation is required to build a secure and stable marketplace for all players. It fosters cooperation between governments, regulators, and digital asset enterprises. The objective of such laws is to promote innovation while advancing a secure environment for all parties involved. Those without laws need to follow the lead of the jurisdiction that has already established themselves as leaders in the field.
Data protection standards are essential
Both PayPal and cryptocurrencies manage a substantial quantity of financial and personal data. Data protection safeguards the security and confidentiality of user data. The GDPR and CCPA have significantly influenced PayPal and crypto. Both legislation compels corporations to establish stringent data protection procedures. Also, they provide customers with greater control over their personal information.
Fatema Aliasgar is an experienced B2B and SaaS content writer based in Mumbai, India. She has done her Master’s in Business Management and has written B2B content for seven years. She likes to read non-fiction and play board games with her kids during her free time.