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Cryptocurrencies, a decentralized form of money that is free of government influence are already driving serious economic discourse in different parts of the world. Some people believe that decentralized money is a solution to some of the economic problems in the world and others believe that decentralized money could potentially birth bigger economic problems. Interestingly, the regulatory environment for cryptocurrencies still remains largely undefined in most parts of the world.
However, Stavros Lambouris, CEO of an international trading platform HYCM Europe submits that “it is only a matter of time before governments and their agencies come up with robust regulations on the operations of stakeholders in the cryptocurrency arena.” For one, the economy is one of the key factors that give governments their legitimacy. Hence, ceding the control of monetary systems to decentralized protocols could have ripple effects on the political landscape. This piece seeks to review how the regulatory framework for cryptocurrencies could help the industry evolve and thrive.
A call for increased regulations
Ripple is one of the biggest cryptocurrencies in the market – in fact, it is the third largest cryptocurrency in the market. However, the company has called on regulators to ramp up efforts to end what it calls the “Wild West” days of the cryptocurrency market. In a chat with The Telegraph Ryan Zagone, head of regulatory relations at Ripple notes that “we’re at that time now where we need more clarity and rules and we need more certainty. It’s a good time to start revisiting that ‘wait and see’ approach taken by regulators.”
One of the reasons Ripple is clamoring for increased regulation is the bad rap that cryptocurrency tends to generate in the mass market. The brains behind Ripple believe that increased regulation could weed out the scam artists and to make it easier to manage the risks associated with cryptocurrency investments.
In addition, the sustainable growth of the cryptocurrency industry is dependent on increased mass-market adoption. Unfortunately, many people in the mass market take cues from Wall Street when making investment decisions. Hence, the mass-market is not likely to embrace cryptocurrencies until institutional investors are in the market. For what it’s worth, institutional investors will continue to stay on the sidelines until the cryptocurrency market is standardized and regulated.
However, other stakeholders in the cryptocurrency space believe that regulations could stifle innovation in the cryptocurrency markets. Llew Claasen, executive director of the Bitcoin Foundation, in a letter to the Senate Judiciary Committee noted that cryptocurrencies “must be allowed to develop, be rolled out and tested in real environments without material interference or overburdening regulations.”
Cryptocurrency regulations don’t have to be repressive
The general cryptocurrency industry has operated with a “us” VS “them” mentality for too long such that every attempt of governments to regulative cryptocurrencies is perceived to be an attack of sorts. Granted, governments haven’t done a very good job of accepting the fact that cryptocurrencies are here to stay and they’ll co-exist with (if not displace) fiat currencies. Nonetheless, the cryptocurrency industry might want to stop being suspicious and paranoid about government interest and proposed regulations.
For instance, the regional government of Quebec, Canada has published a fact check on Bitcoin in which it noted that there’s no meaningful connection between Bitcoin and illicit transaction. The government noted that cryptocurrencies “forms only a tiny part of the criminal money circulating around the planet. The reason: it is less attractive for anyone who wants to make transactions without leaving a trace.”
The Australian Government is also making a concerted effort to create a comprehensive regulatory environment for cryptocurrencies in the country. The government notes that a robust regulatory system will provide clarity to stakeholders in the cryptocurrency industry and help them to unleash an unprecedented level of value without being worried that they might be unwittingly doing something illegal.
