Cryptocurrencies Are Causing a Lot of Headaches for the Regulatory Authorities
This will be an interesting year. Cryptocurrencies are becoming more mainstream, and regulatory authorities all over the world are racking their brains to figure out how to approach them. Forbidding cryptocurrencies is not viable. To do so, one would have to forbid the entire internet.
The regulatory authorities are in an uneasy position. On the one hand, they need to create a framework to prevent money laundering, protect investors, and give the whole affair a shape of sorts.
On the other hand, this is a new technology, a completely new perception of the financial world and how transactions are processed. The speed at which value can change hands now is amazing. Value is coded in ones and zeros, in a few hundreds of kilobytes of data. The ability to actually control that value has been significantly reduced – not to mention the fact that the existing measures look awkward at best, like explaining at an airport why you’re carrying more than $10,000 in cash. With a mobile phone and a mobile wallet, you can carry millions in cryptocurrency. No questions asked, no privacy infringed.
At present, the regulatory authorities have a couple of options:
1. Take a Restrictive Stance, Hold up a Threatening Finger, and Attempt to Forbid
How long can such an approach last? Technology cannot be stopped; it will flatten everything in its path. Strict bans won’t help. The Chinese approach certainly has not been inspiring. You might as well try to stop people from breathing. It’s impossible. Furthermore, making threats will only lose its effect over time. No, the rest of us should not be following China’s example here.
2. Lead an Open Dialogue, Set a Basic Regulatory Framework, and Learn How the Technology Works While Removing System Bugs
The “know your customer” and “anti-money laundering,” or “KYC/AML,” policy is a start. It is already widely accepted by crypto exchanges and their clients. This is the most rational and most reasonable approach. As the old proverb says: Rome wasn’t built in a day. Even Wall Street underwent some development. The current regulations haven’t always been there; they were introduced gradually as the market developed.
Do you remember the “last look” debate about a banking rule that became a news item after the most recent financial crisis? Until then, most forex clients didn’t even know that banks were using something like that.
At First Crypto ETF, we are in close contact with lawyers and regulators. The know-how at our disposal may help set a logical regulatory framework for cryptocurrencies and the general public. 2018 will indeed be an interesting year, from the viewpoint of both the regulatory authorities and the market players alike.
First Crypto ETF Press Release: http://bit.ly/2ojfrGp
For more information on First Crypto ETF, visit www.firstcryptoetf.com.
Peter Vrábel is CEO of First Crypto ETF.
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