When Bitcoin was created in 2009, it was a unique event for the whole financial world. The concept of having a cryptocurrency which was a decentralized one without any central government was appealing to everyone.
At the time of its creation, Bitcoin was not very popular among citizens, as it is now. The value was very low, and it was 2017 when Bitcoin really made the breakthrough, reaching over $19,000. Since then the price diminished, Bitcoin has become very volatile but always maintained its stability if we do not mention the recent events related to coronavirus.
One of the most important things, which is a controversy among experts is the issue of regulation. While we know that cryptocurrencies lack regulation, some people think that there should be a universal crypto regulation and this article will revolve around this topic.
It’s even impossible to regulate Forex
Before we move to cryptocurrencies, let’s talk a bit about the largest market out there.
Thinking about a universal regulation for cryptocurrencies is a bit of a stretch when we don’t even have a universal regulation for Forex. The foreign exchange market has different rules and laws no matter which country you may go to. Even the most in-sync territory in the world, the EU has differences in how this industry should be handled. Sure there may be a Union-wide regulation, but most countries still rely on their own financial regulators to create guidelines.
This creates an iron wall of sorts that some countries don’t just allow any kind of activity from brokers which would then spill over to other countries. And when was the last time that the world unilaterally agreed on anything? The difference in regulation makes sure that even the top forex broker in Nigeria does not access the markets of the EU simply because of the difference in law. You see, Nigerians tend to deposit less and use more leverage, while Europeans deposit more but use less leverage. By introducing the same features to EU traders, there’s always a risk of having them lose much more than lunch money.
Overall, most brokers and regulators agree that the difference in regulation is good. According to some experts, most notably the ones from 55brokers, there’s simply no way that a universal law of foreign exchange could exist, and the majority of the world agrees. Since there is no universal regulation of foreign exchange, a universal regulation for cryptos is just not going to happen.
It is impossible to regulate crypto
It is important to note that it is directly impossible to regulate cryptocurrencies, as managing their accounting system is entirely decentralized. The only thing that can be done is to define and formulate additional rules regarding the circulation of cryptocurrencies in the country and similarly monitor their implementation as they monitor cash turnover.
If we talk about who should regulate the cryptocurrency market, it is logical to assume that cryptocurrencies fall under the control of financial institutions. This fact opposes the concept of decentralization in its hand.
The state can be liable only for those obligations that it can regulate and control. Both the work of cryptocurrency exchanges and the cryptocurrencies themselves contain risks that cannot be assessed at this stage of technology development and, therefore, insured. This makes it impossible to take full responsibility for their work.
Today, there are a lot of risks in the cryptocurrency market. For example, a critical vulnerability may be found and used in the algorithms of the cryptocurrency, through which it will be possible to violate such basic principles as emission or the inability to copy coins. Then the entire ecosystem of the currency will be undermined. It is impossible to predict such a course of events. With the work of centralized cryptocurrency exchanges, things are roughly the same. Attacks by hackers are still unpredictable. It turns out that end users can use cryptocurrencies and related services only by taking all the associated risks onto themselves.
Money laundering and terrorism risks
If we remember the case of Facebook’s cryptocurrency Libra, a lot of entities opposed its creation, because of the fear that criminals and terrorists would use it to conduct and conceal illegal activities. Of course, it makes sense, and it would be completely acceptable to express concerns, but if you keep track of suspicious activities, then it means any activity could become detectable. And people choose crypto exactly for the reason to remain anonymous on the Internet.
Applying universal regulation may at some point hinder money laundering and terrorism activities, but it will prevail in other transactions as well.
So what is the future for universal crypto regulation? We think it is unlikely to be adopted, and for the time being, there is no need for that. A lot of countries at the state level have some restrictions on the use of cryptocurrencies, but it does not have an effect on other countries. Once again, the real motive for people to select crypto as a way of payment is its speed, anonymity, and security. Only a particular person knows about its transaction history, and it is not visible to everyone else unless he or she decides to reveal it.
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