The regulation of cryptocurrencies
Owing to its increasing popularity, the demand for bringing regulation in the cryptocurrency market is growing rapidly. The total market value of digital coins is close to 1 trillion US dollars, but there are still no regulations to protect its investors from harm. The trick here is to find a balance between investor’s protection and at the same time protecting the entire system’s stability and encouraging capital formation through legal means. This will create a smooth path and enable organizational capital into cryptocurrency markets.
The current regulatory system is messed up because of being divided into different jurisdictions. Where China is taking strict measures against crypto currencies, Japan is having an open to all approach. Without a union between different governments throughout the world, creating a proper regulation would be whimsical.
Piling up concerns
The main objective of creating crypto coins was to bring in a new type of payment system where the user will not have to pay the third-party organisation, mainly the bank, to finalise a transaction. Nor the approval of the bank will be required to conduct money transfers. But right now, the crypto coins are being traded at the exchange platforms to gain revenue as a highly conjectural asset.
Also, there have been initiatives of ICO (Initial Coin Offering) where investors will make early investments against new and upcoming coins and expect great results. China and Vietnam have banned the ICOs, but Japan has taken a more friendlier approach. On the other hand, the United States and the United Kingdom have adopted a wait and see approach. Other developing countries are not taking any risk and have stepped aside from providing protection to the investors on ICOs. As you can see, different countries have different policies on crypto coins.
According to the different governments, digital coins are taken as asset, property, currency, loan, deposit, security, derivatives, etc. creating a taxonomy based on the usage of digital coins are extremely important.
With different governments offering different regulations, crypto coins are being utilized through illegal means using the legislation of the favourable country. Incidents of money laundering have become very common. Governments should take necessary steps to avoid and eliminate corrupt practices.