Key Takeaways:
- Cardano partnered with analytics provider Coinfirm to ensure regulatory compliance of its native token, ADA.
- However, the move might be unwelcome as regulatory compliance might make ADA prone to censorship.
- Meanwhile, ADA fell by almost 16% between high to low levels in four days.
NEW DELHI (CoinChapter.com) — Cardano Foundation, a non-profit behind the public blockchain platform Cardano (ADA), has tied up with blockchain analytics provider Coinfirm to ensure ADA’s compliance with the Financial Action Task Force (FATF) guidelines.
The move would deploy Anti Money Laundering (AML) and Combating the Financing of Terrorism (CFT) analytics on the Cardano blockchain. However, the introduction of FATF compliance regulations might make ADA susceptible to scrutiny from Central banks and regulators. As such, crypto loyalists believe the move may act against the decentralized nature of ADA as a cryptocurrency.
Meanwhile, Cardano’s ADA token reached a new ATH of $3.02 on August 23, though market corrections pulled back prices. ADA prices lost 16.6% between August 23’s high of $3.02 to August 26’s low of $2.523.
ADA- Decentralized No More?
AML/CFT analytics integration would allow Cardano to comply with FATF, Europe’s Sixth Anti-Money Laundering Directive (6AMLD), and other regulations. The use of cryptocurrencies to launder money or to finance terrorism is an issue that has plagued the crypto world since its inception.
Hence, AML compliance would reduce the risk of illicit or illegal ADA transactions, assuring governments, regulators, and consumers. In addition, Coinfirm said it would provide AML/CFT analytics to all assets that use Cardano’s blockchain.
AML/CFT analytics is essential for a cryptocurrency to receive mass adoption within regulated markets. The tools and services provided by Coinfirm enable every exchange, custodian and all other third parties to clearly track the history of ADA held in their wallets
said Mel McCann, Head of Technical Integrations at Cardano Foundation.
Regulatory compliance is necessary to increase the adoption of cryptocurrencies. However, it brings with it increased scrutiny.
Also Read: Bitcoin miners want to sell BTC for way above $50K, new analysis shows.
Crypto rating provider Weiss Crypto shared a thread on Twitter, highlighting why Cardano’s decision might be a bad idea. According to the firm, excessive regulation would make Cardano a ‘censorship-prone, politicized, and manipulated network.’.
Additionally, the firm stated regulators use AML laws only to control and spy on financial transactions. Though Crypto Weiss agreed that regulatory compliance is necessary, they highlighted that compliance obligation should be on individual projects, not decentralized networks.
Finally, the crypto rating firm warned blanket regulatory compliance might result in the demise of cryptocurrencies, turning them into centralized, regulated assets similar to fiat currencies.
Charles Hoskinson, the founder of Cardano, tweeted his reply saying that ADA is a ‘completely agnostic protocol.’. He further added that the blockchain’s main purpose is creating modules and ecosystems.
The Cardano founder emphasized that adding AML/CFT analytics would help businesses comply with their respective regulatory bodies.
Meanwhile, Prices Plummet
ADA reached its ATH of $3.02 on August 23. However, prices declined almost immediately afterward. ADA prices fell by 6.72% intraday on August 24, its second-highest decline since June 25. The Cardano token is still bullish in short and long-term ranges, indicated by its 50-Day (Green) and 200-Day (Yellow) Moving Average trendlines
For now, ADA has support at $2.432. A decline below the support would see prices fall by 18% from current levels to $2.126, near the 36-Day (Violet) exponential MA trendline.
Resistance for ADA sits at $3.044, near its current ATH. Once bulls breach it, their next target would be $3.246.
Also Read: Cardano bears bite back as ADA falls over 14% off its peak level.
As ADA reached its ATH, its relative strength index climbed into the overbought region, which might have prompted the pullback. In detail, an asset with RSI above 70 indicates a trend reversal is in the cards.
Currently, ADA’s RSI is at 67.82.
Moreover, MACD for ADA is also showing declining bars on the histogram. The MACD histogram plots the difference between the MACD line (12-Day and 26-Day difference of EMA) and the MACD signal line (9-Day EMA of MACD). If the MACD line crosses below its signal line, it is considered a bearish crossover.
Though the bars are positive now, their magnitude decreases, indicating the MACD line is moving downwards. If the bars go negative, it might create sell-off fears for ADA.
At the time of writing, ADA was trading at $2.607, down 4.90% on the day.
