Cryptocurrency regulation is a highly controversial topic and is something that is much debated in the industry.
Bitcoin, amongst other cryptocurrencies, is defined as digital currencies and assets, but when it comes to regulations, figuring out the best approach to legally defining them has become a much bigger problem than many first expected.
Cryptocurrencies are increasing in popularity and alongside this increase, the discussion as to whether to implement a standard regulation is becoming more widely discussed.
This is because, if it were to be regulated, then governments can exert control over the use of crypto and that in itself is widely debated.
It is an ongoing debate, but is there a way that crypto can ever be regulated? Let’s have a look in more detail.
What Would Regulation Mean For Cryptocurrency?
More regulation in the crypto market would mean more stability and, in a notoriously volatile market, this can have some positive effects. The introduction of regulation would protect investors and traders, so it should be considered a good thing, rather than a bad one. Regulations would also protect long-term investors and prevent fraudulent activity within the system itself, which would make crypto more attractive for businesses to focus on.
However, cryptocurrency enthusiasts are openly against such regulations. They believe that regulations would hinder progression and innovation in the industry and regulations themselves go against the very spirit of cryptocurrency. For anti-regulation enthusiasts, the decentralized nature of cryptocurrency – which unlike traditional currencies isn’t backed by government authorities or institutions – is one of the biggest attractions. In their view, any regulations imposed would pose a threat to cryptocurrency, rather than have any benefits.
Can You Regulate A Decentralised Network?
One of the primary purposes of building cryptocurrency was for it to be decentralized and distributed – two equally important qualities which make it almost impossible to regulate bitcoin and other cryptocurrencies.
By being decentralized, cryptocurrency doesn’t have a single entity that can be controlled. There is no single person, government, or business that owns or controls cryptocurrency. This control is shared across numerous independent entities all over the world, which also makes it nearly impossible for a single entity to have full control over it.
As it is distributed, cryptocurrency can exist at many different locations, all at the same time. This makes it very difficult for a single power to control or enforce it across continents.
How Should We Approach Cryptocurrency Regulation?
When it comes to the topic of how we should approach cryptocurrency regulation, there are many different things that can influence any future decision taken.
For example, governments can influence the price of the cryptocurrency in a number of ways. Firstly, they can regulate the price of assets through selling and buying actions across international markets or charging fees for crypto to cash exchanges. Then, they can engage in creating strict regulations which will inevitably lead to an increase in cost. In these two examples, it can be seen just how governments have the potential to make some big changes which, although wouldn’t affect cryptocurrencies on a large scale, can still disrupt the market for several users.
The purpose of cryptocurrency regulation would be to protect investors and prevent fraud and scams, but there is still a core issue that lies at the foundations of the cryptocurrency regulation debate – how will these regulations affect investors and the price of cryptocurrency assets? One of the current features of cryptocurrency is that investors can send anything between a few pennies to billions of dollars worth of cryptocurrency anywhere in the world, at any time of the day, for a fee.
Is Cryptocurrency Currently Regulated Anywhere?
There are currently no internationally coordinated regulations in place for cryptocurrency in any country around the world. Banks all over the world continue to closely monitor crypto regulations and trends, with a shared global interest in stabilizing monetary systems.
Cryptocurrency is currently banned in 9 countries, including China, whilst another 42 countries have restrictions on how banks deal with cryptocurrency. For some of these 42 countries, regulations are a way to protect investors and prevent fraud, whilst others have banned crypto to avoid destabilization of financial markets.
There is just one country – El Salvador – where citizens can use bitcoin legally in all transactions alongside the US dollar, however since its introduction in 2021, it has caused financial difficulties across the country. Around 70% of the population in El Salvador does not have a bank account, whilst 50% of the population is not online, making Bitcoin inaccessible.
Crypto: Moving Forward
Although many countries have made progress when it comes to regulating cryptocurrencies and Bitcoin, it is ultimately going to take a lot to enforce any kind of global regulation. Bitcoin, and other cryptocurrencies, can be regulated, but it’s getting all countries to agree and follow similar regulations.
There are also a growing number of cryptocurrency scams, as unfortunately with crypto, there are many avenues in which scammers and hackers can steal investment funds. With the number of scams increasing, demand for investment fraud lawyers is on the rise, too.
Cryptocurrency isn’t going anywhere anytime soon and it’s important that as more and more people begin investing and trading, there are more regulations in place to protect both traders and investors.
Author Profile
- Blogger and Educator by Passion | Senior Online Media & PR Strategist at ClickDo Ltd. | Contributor to many Education, Business & Lifestyle Blogs in the United Kingdom & Germany | Summer Course Student at the London School of Journalism and Course Instructor at the SeekaHost University.
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