Crypto Regulations Might Be a Good Thing: The Untold Truth
Daniel Levi
Posted On October 13, 2022
Cryptocurrency and blockchain technologies have revolutionized the financial sector by bringing concepts such as decentralization, security, and transparency to life. Some savvy investors who saw the lucrative opportunities the sector was able to offer joined early… and are already sitting on a gold mine. Start-ups and competitive businesses also jumped on the bandwagon.
Pushed by fear of missing out, regulators and central banks began to question the value of cryptocurrency and impose regulations. While many enthusiasts, investors, and businesses found that move outrageous, we have to note that crypto regulations might be a good thing. Here is why:
Cryptocurrency Regulations to Curb Illicit Activities
While authorities have a long way to go to catch up with the tech innovations in the DeFi sector, regulations are good as they can curb illicit activities. As stated on the official European Parliament page, regulations can end illicit flows. Expert Ernest Urtasun said: “Illicit flows in crypto assets move largely undetected across Europe and the world, which makes them an ideal instrument for ensuring anonymity. As illustrated by all the recent money-laundering scandals, from the Panama Papers to the Pandora Papers, criminals thrive where rules allow for confidentiality allow for secrecy, and anonymity. With this proposal for a regulation, the EU will close this loophole.”
Expert Assistant Kanko added: “ We should be facilitating the use of crypto-assets by people of goodwill safely and correctly, as well as protecting against the use of crypto assets for terrorist financing, extortion, child sexual abuse material or money laundering.”
Regulations Go Hand in Hand with Safe Trading Environments
If done correctly, crypto regulations can help investors access safe trading environments. By getting crypto platforms and service providers registered, governments can reduce financial fraud and crypto scams. Note that as per PS 20/10 issued by the FCA, the UK introduced a ban on the promotion of crypto CFDs directed to UK investors to strengthen their regulatory frameworks.
Furthermore, regulations could help traders access safe and reputable platforms such as Binance or Kraken. Additionally, beginner-friendly platforms like this Bitcoin app automatically connect users with top-tier brokers and advanced crypto trading tools.
Crypto Regulations Could Lead to Enhanced Adoption
Pushed by fear of the potential of crypto and stablecoins and the need to answer customer needs for better digital services, central banks are now exploring different digital infrastructures. For example, central bank digital currencies (CBDCs) are growing in popularity. With more and more financial institutions, banks, and governments – some fierce opponents to DeFi and crypto in the past, more people are also turning to digital cash.
While no regulatory framework can eliminate the risks involved in the volatile crypto trading sector, regulations could give beginners a sense of security. Transparent rules could boost mass adoption and also lead to clearer tax liability across the globe.
Cryptocurrency Regulations Across the Globe
While we are still waiting to see how crypto regulations will evolve, we should not that governments still have contradicting views about crypto. China is one of the countries that have banned Bitcoin and other digital assets. Kosovo, India, Ghana, and Algeria are other examples of hostile countries in terms of crypto trading. In other places, on the other hand, authorities are more passive and still catching up. After all, there are many technical and legal challenges governments should tackle, such as the legislation of the growth in popularity of decentralized autonomous organizations (DAOs).
That said, despite the need for a global regulatory framework, there are countries such as Slovenia, Malta, and Estonia that are highly crypto-friendly. El Salvador, for example, is one of the biggest proponents of crypto; BTC is accepted as legal tender there, and plans for a Bitcoin city are in place.
Conclusion
In the end, crypto regulations might be a good thing: they can lead to enhanced security, clear taxation, and improved access to financial services.
While it will take a lot of time for authorities to close the regulatory gaps in the sector, one thing is for sure: cryptocurrency and blockchain technologies are here to stay. Will they complement fiat money or replace entirely the traditional financial order we know? We can only wait and see.
In the meantime, fellow traders, keep on investing… but always do your due diligence first!
