The cryptocurrency market is growing besieged by regulatory authorities and financial institutions in different countries of the world. Many regulators have opinions on this asset class as they consider it quite dangerous for the economic stability of countries and, although they do not say it directly, one of the main objectives is to ban or limit it so that it does not generate major problems.
This situation is experienced all over the world. For example, the UK’s Financial Conduct Authority recently said rules were needed for cryptocurrencies. The fact is that these rules cannot be local, but global. This assumes global regulation is the goal to control the use of cryptocurrencies and the market in general, as the issue of crypto-related companies, such as Binance and other digital asset exchanges, has been addressed.
It seems that the main objective of these regulators is to “keep the market clean”Stopping any type of business or economic activity that endangers investors, but also financial stability. For example, cryptocurrencies have long been in a regulatory gray area and this has to end as these loopholes lead large numbers of people using cryptocurrencies for illegal activities.
Global regulation is the solution
This isn’t the first time global cryptocurrency regulation has been mentioned. This topic has been discussed countless times by regulators around the world. The idea of global regulation, at least from this point of view, could eliminate several market problems, because if all countries set identical regulatory standards, there would be no room for crime.
The fact is that developing such a regulation is not easy. If we look at the case of cryptocurrency companies that are not regulated, there are a great many cryptocurrency companies in the world. And an important point to consider is that many countries have not been too concerned with establishing real controls to combat criminal activities such as money laundering. In fact, while some countries are looking for alternatives to regulate cryptocurrencies, others, such as El Salvador, have approved them as legal tender.
But it is not just about such strict regulations as those applied by China. In the case of the British Treasury Commission, it looked closely at the risks of cryptocurrencies, but also the opportunities associated with this type of asset. This approach took into account social inclusion, the need for regulatory change and the imminent need to advance the issues of technology applied to the economy.
While the possibility of replacing fiat currencies with decentralized cryptocurrencies is not the main argument, or that they work together legally as in El Salvador, some revisions have been required. It will consider the positives and negatives of this process to determine the next regulatory step.
And while the possibility of developing central bank money was not directly discussed, it is a topic that has certainly been quietly addressed. Projects of this type have begun to develop in different parts of the world, with some analysts claiming that central bank cryptocurrencies are the future of the economy.
Protection is needed
Cryptocurrencies are very fluctuating assets, which is why you need to protect yourself from crashes. If we look at the position of the Financial Conduct Authority, we realize that last year they did not allow Binance, which is the leading cryptocurrency exchange in the world, to operate normally because such platforms are not required by the regulations. But now, almost a year later, Spain, France and Italy have allowed Binance to operate, which could be a positive step for the market.
It is clear that governments should protect the traditional economic structure and it is hoped that user safety can also be preserved. But today, with the most recent market crash, the pursuit of regulation to keep users safe is increasingly important.
It is impossible to deny that there are certain risks associated with cryptocurrencies, but it cannot be denied that they have certain advantages either. For now, the challenge for regulators is to find a balance between allowing the use of cryptocurrencies and protecting economic stability. This is why very few countries have made progress on regulation, because regulating this type of asset is more difficult than it seems.
Post up Hide the summary