The last two years have been quite uneventful for cryptocurrencies with regulators launching themselves into the industry in full swing. Their lack of expertise with the way the technology works and how networks run is proving to be detrimental for any hope of reasonable regulation. At the same time, crypto scams – which run wild – will now find it incredibly difficult to function with regulators constantly watching them, as reported by Forbes, July 23, 2019.
End of an Era
Regulation has undoubtedly dominated headlines in cryptocurrency this year. Almost every country has crawled away from their prolonged silence and is trying to actively impose their authority on cryptocurrency.
While the networks themselves cannot be regulated, use of tokens and transfers to fiat can be blocked by governments.
BTVK LLP, a Chicago-based accounting and consulting firm, believes the wild west of crypto is finally coming to an end. Globally, regulators have made cryptocurrency a key part of their agenda; some countries want to regulate the market and reap the benefits of increased trading and financial activity, whereas others have given in to their fear of losing monopoly over currency and recommended an outright ban.
All of this can be linked back to Facebook announcing the launch of Libra, and referring to it as a cryptocurrency. This was the turning point in crypto regulation and spurred on regulators to truly sink their feet in the sand.
Facebook drew criticism from Donald Trump, Steve Mnuchin, and Jamie Dimon amongst others. This has led to a consensus from international experts that believe that stringent laws regarding crypto are expected to be passed in the near future.
It’s important for governments across the world to understand why they need to ensure an optimal level of regulation.
Bitcoin as a network cannot be regulated, but it can be regulated at the off-ramps and on-ramps to fiat. By introducing reasonable regulation that taxes gains and income through cryptocurrency, the government will encourage people to disclose their holdings and contribute to the economy.
However, by isolating cryptocurrency users and shunning it with bans, governments will effectively create a black market from which they reap no benefits.