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Crypto Regulation vs. Merchant Cash Advance Regulation: What’s Going On?

November 25, 2022

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Crypto crashes and the fall of FTX have been making headlines this week as more details emerge about the business dealings of Alameda Research – FTX’s sibling business.

Bitcoin is being dragged down and there are rumors that crypto exchange Genesis is also on the brink of collapse. This has left investors wondering, “when will Crypto Regulation come into play?”

So far, Bitcoin has dropped about 25% of its value after reports about the health of the balance sheet at Alameda Research and is down nearly 75% from its all-time high in November last year.

Genesis is one of the most high-profile organizations caught up in the issue, freezing withdrawals at the end of last week after panicked investors tried to process mass withdrawals that surpassed the company’s liquidity.

A laptop and notepad on a desk Crypto Regulation
MCAs fund vital business expansion. Photo by Andrew Neel on Unsplash

Other cryptocurrencies have been impacted by sell-offs as well, with Ethereum plunging more than 7% since last week. The dip came after allegations that a hacker who emptied FTX wallets earlier this month exchanged about $5,929,000 in FTX for Bitcoin.

All of this is leading to a lot of heated debates about regulation.

The decentralized nature of crypto is the very thing that makes it so complicated to regulate and can leave investors vulnerable to attacks, fraud, and instability.

In light of all this uncertainty, as service and product providers in the alternative assets space, we want to reassure readers that MCAs are fully legal and appropriately regulated.

MCAs are compliant with all usury laws because the MCA is an advance purchase of future business receivables, it is not a loan, and is therefore not subject to usury regulations.

MCAs provide merchants with the vital capital advances that they need to stay in business, often when they are refused bank loans and would otherwise have no other alternative than to go out of business.

Simply, a merchant cash advance is a financial tool that allows a funding company to offer money to a business as an advance against future sales. Money is invested in the firm and repaid as each sale is made.

MCAs can aid firms in expanding, purchasing inventory, launching a marketing campaign, or assisting in other business-related activities. A win-win for both merchants and MCA investors.

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