The rise of cryptocurrency is too widespread to ignore, and too chaotic for governments to ignore. All over the globe, governments are targeting crypto investors by imposing taxes as well as mandatory registration and full disclosure rules. This new wave regulation is a contradiction because some of the most important characteristics of cryptocurrency have always been autonomy and privacy.
Questions concerning State Regulation of Crypto Raises with Shelter Crypto
Australia’s registrations of 246 cryptocurrency trading platforms between April 2018 – January 2019, which was celebrated by both observers and the exchanges as boosting industry credibility, is likely to indicate the direction virtual currencies are moving in regard to regulation.
Some industry leaders view regulatory encroachment in a positive light as a step towards respectability. The cost of assimilating into the mainstream economy through state regulation is increasing, which raises existential questions about the future direction of the industry.
Regulations Threaten Cryptocurrency Independence
While the early cryptocurrency visionaries wanted to be skeptical of authority, emphasizing freedom and autonomy, some of the newer movers embrace regulation as a solution for the trust problems facing the industry.
Malaysia, Australia, Japan and the EU are some of the regions that have used law books to measure aspects of virtual currencies. It is fascinating to see what percentage of crypto’s appeal will still be there.
Satoshi Nakamoto, a pioneering economist from Japan, wrote that “the root problem with conventional currencies is all the trust necessary to make them work.” He made this statement ten year ago. “Banks should be trusted to hold and transfer our money electronically. But they lend it out in waves with very little reserve. Trust them with our privacy and not letting identity thieves drain our accounts is something we must do. Cryptocurrency, however, is built on trust rather that trust.
With benign offers, regulation is being rolled out
Although regulation is in motion with the vaguely appealing promise of support for innovation it is not known how heavy government whims will impact investors and exchanges moving forward. Individuals seeking to operate in an insular environment, free from state and central bank oversight, are now being faced with new demands from the top, which includes the closure of companies and accounts freezing.
Japan has long been known for its openness to crypto. But it has tightened regulation ever since the Coincheck hack in early 2017. Japan’s $530 million heist sent it into regulatory overload. It now requires that all exchanges be registered with the Financial Services Agency as a condition for operation.
South Korea prohibits anonymous accounts in cryptocurrency trading. Banks are required to follow strict reporting requirements for accounts held by digital assets exchanges. South Korea has also banned financial institutions trading on bitcoin futures.