Regulations are set in our daily lives. There specific laws in each country and most are there to protect us. Street lights are telling us when to cross or not to cross. Or driving over a certain speed limit endangers people and thus speed limits exist. These regulations make sense and are there to serve and protect us.
But what about regulations on crypto-currencies?
Digital money that is mostly made up of 1s and 0s? Early adopters of crypto-currencies were for the most part idealistic in their motives. For many, crypto-currency represented the opportunity to develop a decentralised and completely anonymous form of currency. It would be a true ‘free’ currency.
However, the downside of that was that it allowed a gateway to criminal activities such as money laundering to be undertaken without fear of the law. Now that crypto-currencies have expanded beyond early adopters and has entered the mainstream markets, putting the government in a very sticky situation.
Aside from all that, incidents of hacking are creating concerns for crypto investors. One of the biggest news that generated waves of anxiety was NiceHash being hacked, and millions worth of Bitcoin was stolen. Security and protection for crypto users are apparently becoming more of an issue that needs a solution.
So far, the crypto-currency industry has been booming. However, things seem to be going south really quickly, especially in South Korea.
There have been conflicting reports emerging from South Korea about its current stance on crypto-regulation. An announcement was made by the Ministry of Justice. Stating its intent to issue a ban all trading including Bitcoin. Other reports have claimed a stance on regulation rather than a complete ban, exclusively in South Korea.
The question is how real that threat might be. South Koreans have taken to digital tokens with fervour. The worldwide virtual currency boom that started last year has swept up savers young and old in South Korea, helping push up global prices.
The government has expressed alarm. Officials, including the prime minister, have voiced concerns about an irrational frenzy. Raids by South Korean tax officials on digital currency exchanges this week have added to unease among investors.
India’s Reserve Bank had also expressed its concern on crypto-currency back in 2013. However, despite its concerns, there have been no suggestions of implementing any regulations. Leading to a flourishing industry of crypto-currency investors in India. The downside of this has lead to its increasingly legal ambiguity status and the potential negative impact its rapid growth could have on the economy and the block-chain technology overall. This lack of regulation has been the steroid in its growth factor and the development of crypto-currency thus far. But there is increasing ambiguity about the legal status of this currency which is beginning to have a negative impact on the growth of this technology.
In the US there is also an atmosphere of concern. Until recently, the US government has mostly ignored the rise of crypto. In the last couple of months, there have been several announcements for more security and taxes being introduced. All due to the concern of cryptocurrency and its application in criminal activity, such as fraud.
A potential factor that could destabilise the US economy. At the same time, Bitcoin was designated as a commodity by the Commodity Futures Trading Commission. Meaning that Bitcoin is now considered a property unless it is used for payment of some sort.
The overall stance of the US Treasury seemed uncertain about it and are currently reviewing their option. So all in all the US doesn’t seem to know what to make of crypto-currency and has remained unclear about its stance at the moment.
China is clamping down on regulations too. Cryptocurrency exchange and trading are being targetted. Initial coin offering (ICO), equivalent to IPO for virtual currencies, is banned. Domestic access to Chinese and offshore cryptocurrency platforms that allow centralised trading are being blocked as well.
Apart from stopping local exchanges, proposals to discourage mining is being talked about as well.
All this regulation will affect the market, the prices of Bitcoin and other mainstream cryptocurrencies are dropping steadily after news about all these regulations.
But for now, nothing major has been done yet, and we just will have to see what regulations will actually be implemented.
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