Countries Tighten their Crypto Laws and Some Collaborate on Blockchain Regulation
While blockchain technology has earned international recognition for being the mechanism underpinning major cryptocurrencies, blockchain has huge positive potential: to decentralize and streamline financial transactions on a global scale. Countries all over the world are still catching up to an ever-changing system, and many are in a state of disagreement and uncertainty about where blockchain fits into the future of the international commercial ecosystem.
The Australian Securities and Investments Commission (ASIC) recognises that ICOs have the potential to make an important contribution to businesses to raise funds and to investment options available to investors. Guidelines on ICO fundraising were subsequently revealed in Australia to streamline the process.
John Price, the ASIC commissioner confirmed the ICO space will be a key focus area for the regulator going forward. He stressed that the regulator will keep an “open mind” to new financial innovations but not at the expense of “basic consumer protection” policies. He stated the following: “If you raise money from the public, you have important legal obligations. It is the legal substance of your offer — not what it is called — that matters. You should not simply assume that using an ICO structure allows you to ignore key protections there for the investing public and you should always ensure disclosure about your offer is complete and accurate.”
Meanwhile ASIC has started to increase its level of reviewal into misleading ICOs. ICOs are not banned in Australia and while there is no ambiguity about their legal status, they are largely unregulated. Five ICOs have been put on hold from raising capital due to their lack of investor protection measures. Regulation creates confidence and trust in blockchain technology and also greatly helps to reduce legal risk and liability and gives more legitimacy and longevity to the industry.
The EU has taken a firm stance on data privacy, implementing strict regulations that have notable implications for blockchain. The General Data Protection Regulation (GDPR) seeks to harmonize data privacy efforts across the union. The new GDPR standards rest upon the moral foundation that EU citizens should have the fundamental right to control their data. The onus, therefore, will fall on blockchain companies to ensure that the EU threshold for data ownership is met sufficiently.
East Asian nations began to subject blockchain to more significant regulatory scrutiny after an initial approach of “business first, regulation later” in 2017.
China was once considered to be an international refuge for cryptocurrencies but this changed abruptly in 2017 when the People’s Bank of China banned ICOs in the country, sending a clear signal that cryptocurrency exchanges in their present form would not be tolerated.
Although the South Korean government views blockchain technology favourably, it has yet to define its approach on the legal and regulatory laws of crypto funding and trading. Domestic ICOs have been banned for the foreseeable future.
Japanese regulatory bodies have restricted their assessment of cryptocurrencies to Bitcoin only, and are not ready to embrace other blockchain-powered businesses as of now.
In contrast with East Asia, the US Securities and Exchange Commission (SEC) has taken a “regulation first, business later” approach from the very start. The SEC has mandated that cryptocurrencies will be considered “assets” under governmental scope, discouraging many major international crypto-companies from wanting to operate in America.
After intense discussions, Switzerland and Israel have agreed to collaborate on financial technology, cryptocurrency, and blockchain regulation.
Switzerland has long been at the forefront of blockchain innovation, welcoming blockchain start-ups from all over the world with their blockchain-friendly regulation. Switzerland is home to Zug, a small Alpine town which is often referred to as Crypto Valley in a nod to California’s Silicon Valley tech hub. Although the central bank of Switzerland has not been so accommodating thus far, crypto-technology is progressing with or without the support of the banks.
Israel in its own right is also regarded as a major tech hub. It is the source of most Intel processor chips, and a Bitcoin mining rig giant has announced that it plans to triple its development centre in Israel to increase manufacturing. Last year the Israeli Prime Minister Benjamin Netanyahu even suggested that the era of traditional banks and banking was coming to a close altogether and that cryptocurrency may be the turning point. He made the following remark: “Is the fate of banks that they will eventually disappear? Yes. The answer is Yes.”
Final Thoughts
The current state of regulation in the cryptocurrency and blockchain space has attracted a melting pot of perspectives. A unified regulatory framework for blockchain and cryptocurrency will be critical to bring blockchain technology to its full potential. This has already begun. In 2018 members of the G20 started to discuss the future of blockchain and cryptocurrencies on the international stage.
MOBU believes that regulation is a very good thing because it protects unsuspecting and inexperienced ICO developers and investors from abuse. MOBU is a frontrunner in the pursuit of advancement in our commercial ecosystem and this is possible with blockchain technology and its regulation. Blockchain is the next frontier — an essential technology for companies seeking to connect the dots in an increasingly globalised world!
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