Blockchain and crypto community is gradually expanding all across the globe. The majority of people are looking at cryptocurrencies as the source of investment which can profit them in a short span of time. While others are considering the currency as an alternative to fiat due to its digitized decentralized model. Cryptocurrency or Bitcoin was launched in 2009 with the purpose of minimizing the need for approval or authorization from an intermediary or central authority while sending money or completing the transaction. It is meant to function outside the regulated banking or monetary system of any country. Bitcoin is successfully performing its role by following the decentralized model while maintaining a high level of security, privacy, and transparency in the digital financial system.
With ramp-up popularity, blockchain technology-based cryptocurrency is captivating the attention of legislative and regulatory authorities. On one hand, true players in the crypto industry are attracting investments in crypto space, while on other shady transactions, headlines related to cybercrimes and lost coins, fake projects, crypto scammers, and many more are degrading the reputation of digitized currency. Presently, one of the most heated debates in the crypto sphere is the related future of cryptocurrency regulation– Should Cryptocurrency be regulated?
A Glance On Cryptocurrency Regulations | Should Cryptocurrency Be Regulated?
Cryptocurrency had left no country untouched from its effects since 2017 when the price of Bitcoin skyrocketed around $10,000 on some of the crypto exchanges (Obviously the community is gaining huge profits!). Also, effects seemed to trigger the regulatory authorities of the nations all across the world to formulate rules and regulations to administer the decentralized digital financial system. Acceptance of crypto coins by masses compelled the authorities to think- Is cryptocurrency really the future?
Recently, the bill labeled as “Cryptocurrency Act 2020” was put forward by the group of United States Congressman to govern the crypto world. Last year in November, the Financial Stability Oversight Council of the US necessitated tighter supervisory regulations on stablecoins and digital assets and also urged to scrutinize existing laws to review products and services in blockchain space. The Security and Exchange Commission of the country is already engaged in scrutinizing and punishing nefarious ICOs and exchanges.
In the first week of 2020, Fifth Anti Money Laundering Directive (5AMLD) was launched by the European Union to regulate some of the activities related to crypto-assets like mandatory KYC rules for cryptocurrency platforms and crypto wallet providers for the purpose of anti-money laundering. Many of the major nations like Germany, Italy, Netherlands, and many more will implement the regulations soon.
Central Bank of Russia earlier denied the integration of cryptocurrencies with the public monetary system, but after considering the stance of various banks and politicians including President Vladimir Putin, it is convinced of formulating crypto regulations instead banning.
Many of the countries like Egypt, Bolivia, China, Nepal, and many more ha actually banned the cryptocurrencies and consider them illegal. China, which was known to be the hub of cryptocurrency, banned exchanges and ICOs, snipped the power lines for BTC miners, and even cut the internet access of the platforms engaged in activities associated with cryptocurrency.
Few countries like Switzerland have adopted cryptocurrency with a welcoming hand. One of the Swiss towns of Zugg had already earned the reputation of Crypto Valley” which is a hub of more than 200 companies associated with blockchain technology and providing the services and products in crypto space.
Recently, while considering the future of cryptocurrency 2020, the Supreme Court of India declared the “blanket ban on cryptocurrency” imposed by the Reserve Bank of India (two years ago) as constitutional. Also, the Indian Parliament is expected to put a bill in the House related to the regulatory environment of crypto space in India.
Reactions of countries are like a mixed bag, where some are fully opened to accept while others are completely against the cryptocurrency and there is a majority of countries that are considering the benefits of crypto coins and engaged in designing the regulatory space to safeguard the investors while exposing to new kind of currency.
Does the Crypto World Need To Be Regulated? | Should Cryptocurrency Be Regulated?
Do you think- will cryptocurrency ever be regulated? In the current scenario, consumers and lawmakers are certainly vague over the regulatory space of the crypto world. There is an ongoing debate over which agencies are actually responsible to regulate different types of cryptocurrencies. But noticing the pace of expansion of the crypto world, where last year social media giant Facebook launched the Libra project (associated with new crypto coin backed by different fiat currencies), more than 400 new projects and service providers have launched their projects, price of Bitcoin is continuously experiencing the increased prices (cryptocurrency future value might be really high!), one of the lessons can be learned that this game needs rules.
Some of the international forums like G20 already signaled to handle the murky crypto crystal ball when the central banks of countries met in Buenos Aires in March 2020 and committed to set the regulations to monitor the transactions involving crypto assets.
How Should Cryptocurrency Be Regulated?
To benefit the crypto space and also to protect the investors and increases the confidence of a new businessman and finally to satisfy various regulators, some ground rules must be considered before introducing or restricting the crypto assets:
- Clear and crisp definition must be formulated after having consensus between regulators and renowned companies of crypto space.
- No hidden and abrupt rules are imposed on the exchanges, but the clarity of guidelines need to be maintained since the initial stage of introduction of rules
- Regulations must focus on providing a conducive and secure environment to crypto investors, rather restricting them not to get involved with crypto assets.
- Anti Money Laundering rules, guidelines related to Know your customers, verification, and authentication process, taxation rules must be clearly formulated.
- Businessmen, investors, exchanges, startups, and people associated with crypto space could be incentivized initially to follow the regulatory space.
How A Regulatory Environment Can Benefit Crypto Space?
If the regulatory crypto space successfully reduces the number of fake ICOs, develops the assurance protocols to protect investors against scams, and provides high-quality custody solutions to safeguard crypto assets, then the crypto sphere can be benefited at high scale.
- A smart and transparent regulatory environment can attract the hesitant crypto enthusiasts with fresh investments and better services.
- Regulators of different countries may start deploying the crypto with limited supply, once the anxiety related to money laundering and financial terrorism will be reduced.
- Governance in crypto space can help in developing the crypto partnerships beyond their initial stages, allowing a number of startups and developers to identify cryptocurrency as an opportunity.
- Digital coins which are still considered as doubtful currency can earn a respectable name in financial space.
What Does Cryptocurrency Regulation Future Hold?
Undoubtedly, recent meetings of the central banks, discussions among the CEOs of crypto giants, and debates around the expansion of cryptocurrency, reveals an appetite for a balanced regulatory environment. Mainstream investors must be assured of the security of their investment in crypto space but technology must not be overregulated that it loses its purpose to revolutionize the financial space. Easy of regulations must be assured for crypto exchanges but not at the cost of scamming the investors. Innovations must be welcomed but with some regulatory obligations. So, should cryptocurrency be regulated? The future of cryptocurrency regulation is undeniable but we can hope for the balance regulatory crypto space.