The booming cryptocurrency market will definitely be a game-changer in the coming days. There has been increased participation in the market. Big and small businesses alike shift operations to join the cryptocurrency market place. There is also increased friction between crypto business and regulators across the globe were also seen.
There is no particular jurisdiction governing cryptocurrencies businesses’ operations. That is why different regulators have been tasked to deal with these within the space. Different jurisdictions have taken a different approach when it comes to regulating cryptocurrencies. The initial stance was to ban or put strict measures against crypto and their operation. But this has since changed as more authorities have begun to appreciate the technology. Despite constant calls for regulations, regions such as Africa remain unregulated.
There have been numerous regulatory proposals since the last quarter of 2019. These proposals aim to improve the marketplace. Though many proposals were rejected, a few have contributed to shaping the current market. Some of the notable regulations include one from the U.S. Securities Exchange Commission. In their September letter, they gave crypto exchanges the freedom to trade digital asset securities. But only if comply with SEC Rule 15c3-3 or the Customer Protection Rule. According to Ria Bhutoria, the head of research at Fidelity Digital Assets:
“The OCC’s July 2020 interpretive letter represents a major step forward in increasing the comfort of traditional institutions with digital assets.
But the main question is, are the currency systems enough to support the growing market?
The Conference of State Bank Supervisor launched a new regulatory framework earlier in September. This will be used for payments and cryptocurrency companies. It was initiated by regulators from 49 U.S. states. The purpose was to create a single set of supervisory rules for businesses’ money business. The new system aims to “ensure the compliance of regulations on cybersecurity, financial condition, anti-money laundering, and other areas”. The spokesperson added, “Companies have to be licensed in 40+ states to be included.”
In June, the Swiss government unanimously passed a legislative package. This is to modify several financial laws to pave the way for cryptocurrencies businesses.
Rolf H. Weber, professor of financial market law and chair of the working group for regulatory issues at the Swiss Blockchain Federation:
“It’s known that Switzerland is very much trying to encourage blockchain business. It’s a political objective,”
Love-Hate Relationship Between Crypto Business and Regulators
Most of the regulations have a positive effect on the crypto market. Unfortunately, some have caused friction between regulators and these businesses.
Last month, New Zealand regulators, the Inland Revenue Department grilled companies to provide information on crypto users. The move was met by strong opposition from crypto businesses in the region. Janine Grainger, the co-founder of New Zealand-based crypto exchange Easy Crypto, expressed displeasure by stating:
“While many people might think that they have nothing to hide, therefore… the point of privacy isn’t to aid people who have something to hide, it’s to ensure we have a fair, open, and free society.”
The United Kingdom has recently announced a ban. The ban was imposed on certain types of crypto-based financial products for retail investors after a long year review. Some businesses had already set shop in the region and will be forced out once this rule becomes effective.
A Call for Cooperation
More firms involved in crypto invented are still operating without licensing. This is according to a recent finding by the University of Cambridge. Some are vulnerable to indictments while others dupe investors out of their money. There is a need for regulation and a good working relationship for both parties. So far, the tug of war between the two does not seem to help the situation.
Authorities need to appreciate what crypto business have done in shaping the current financial market. Also, the crypto business needs to understand the various benefits that come with regulations. This means that the crypto business and regulators need to work hand in hand for a symbiotic existence. Both are also responsible for creating a friendly environment that stimulates cryptocurrency adoption. Cooperation will help understand what needs to be done, changed, or accepted for a better future.