Cryptocurrency rules imposed by governments have been different across various jurisdictions. This has given birth to a uniquely vulnerable form of regulatory arbitrate that allows stakeholders to take advantage of polarised stances from various authorities. Breaking down this aspect and coordinating for broadly similar guidelines across the globe will allow for more clarity and bring in the wave of institutional adoption that crypto has yearned for, as reported by Forbes, December 9, 2019.
Establishing a Common Framework
Running a cryptocurrency exchange in China is probably one of the most stressful enterprises to manage. Undue regulatory pressure, sudden raids, and the need to get on the good side of Chinese Communist Party (CCP) members are all part of the game. Circumstances like this caused Changpeng Zhao to move Binance from China and into Malta.
Regulators from various states hold highly diverse opinions. Some, like Brad Sherman, want an outright ban while others want to embrace it. Discussions at international forums like the G20 have raised very pertinent questions, mainly revolving around the drawbacks of allowing the industry to operate outside the bounds of rigid legislation, and whether or not these assets were designed to override regulation.
An especially stressed viewpoint is the need for international guidelines that deter business owners from simply changing their country of operation in order to find. Further, it will create empires in certain regions while cutting off access to innovative technology in others. International guidelines are an absolute must, but we should also recognize their are unique challenges in each region.
How Institutions Fit In
It has been established time and time again that the single most significant barrier to institutional money is the lack of certainty around regulation. Large investment funds with colossal corpuses are not going to pour millions or billions of dollars into an industry that could be barred by the state.
Considering the nature of institutions, they have a responsibility to their clients and stakeholders to engage in activity that is profitable over the long term. If regulators got together and decided on a framework, and gave the industry the legitimacy it desires and deserves, it would lead to a much better situation for institutions standing on the sidelines waiting for a true green signal from regulators.