Cryptocurrency and Regulation

Much is discussed regarding the Cryptocurrency’s market value, and indeed in the past couple of years this market is growing as fast as Trump’s scandals. Nevertheless, this market will probably go up and down for a few more rounds until stabilizing and becoming a place to trade a common and commercial financial exchange tool[s]. For now, we can definitely see a movement in the masses mindset from the “buzzword” stage towards the “understanding-crypto” stage, and as a true believer of the “new internet”, I’m sure that in the long term the Cryptocurrency will be much better used and utilized.

When talking about Cryptocurrency use, such as ICO concepts, operational use cases (for example an autonomous taxi and royalties mechanism) capital uses cases (such as real estate tokenization and other investments) - we need to remember that this market is not yet fully, or much, regulated. Nowadays, more and more governments are aiming towards that direction and the reasons are obvious.

First, almost every time a Blockchain-of-some-sort-Company is communicating that it’s going to be publicly traded, or wants to issue a bond, Investors, Hedge Funds and the Stock market in general are all entering madness mode and the price moves as a pendulum. These are, in most cases, riskier situations worthy of oversight (we should note that new regulatory state can strongly impact market movements as well). Second — Money. Each country sees the economic potential with this market’s investments, while also trying to solve its financial issues. Third — progress, improvements and enhancements of public services.

We can see many countries are planning and considering how to tax ICO’s; aiming to deeper the regulation surrounding an ICO project, scrutinizing the offering companies which deemed to be compliant with heavy privacy regulation, permitting cryptocurrency exchange platforms, asset dispositions, etc. Below we can find just some of global regulatory changes — these changes can help lead the path for greater and more practical use cases with public blockchains, stable coins, and FOREX, and to try and make real change in our everyday lives.

The European Union is partnering up in order to find good ways to deliver cross border digital public services “with the highest standards of security and privacy”; France had began debating on the future of ICOs regulation, preparing grounds for new laws. Switzerland and Israel had agreed to share information regarding regulatory progress, as both states seeking to reach frontier achievements; Singapore’s Monetary Authority has issued last a guide to a Digital Token Offering, signaling the market of the pioneering vision of state, even claiming that Singapore is not to regulate Utility Tokens. and indeed the Crypto market is thriving in Singapore; The Philippines are to start regulating ICOs, providing detailed description on the regulatory process with a draft circular published by the Philippines SEC; India is sending state officials on a global tour in order to study ICOs and cryptocurrency, building the information basis for new state regulations; Vermont, US, long long ago declared the legal admissibility in court of data stored upon Blockchain, while this has only recently came into effect in China, being a state that usually not so friendly towards this market.

The UK is constantly reporting her Majesty’s Blockchain state, pioneering a Sandbox regulation approach and giving much room for experiments. In the meantime it’s business first regulation later in the UK, especially in compare to the advanced steps made by the European Union, and while being in the top countries to host blockchain initiatives. In contrary, in the US the federal government is taking no clear approach while leaving it to the states, kind of a Federal Sandbox program, watching the development and leaving [to] much room to difference of opinion between the states, while even different federal agencies treat it differently.

Notwithstanding the above progress, from the developers side, we need to validate the legality of the transactions written in the blocks; of the application of the Decentralized Application (Dapp); of the transaction itself. The End-User, the Front-End interactor, the Administrator — all of these are humans interactors who are in need of protection from Frauds, Scams, Theft, Privacy breaches and Data Protection, Criminal participation (AML, to the least), or just non-compliance with the legal liabilities each country imposes. This can be a challenge in Public Blockchains where everyone is nobody and all of them has a full identical copy of the Blockchain — raising the stakes of building Blockchain business solutions.

A business model that relies on Blockchain require subjective Dapp architecture to make the business sense wanted and visionized. Smart Contracts are flexible in a way that it broaden the scope of possible build though with that possible risk exposures. Thus, the owner of the process needs also to audit his internal and external risks in order to facilitate the engaging parties.

To conclude, though the vision is having a non-governed non-trust-party platform, some regulation is obviously necessary for protection as people are these using it. Nonetheless, regulation is a good thing in this new land, it is a declaration of the state recognizing a common used [crypto] asset, all the more necessary when more than 50% of ICOs are failing, losing the investment made.

While we’re seeing countries struggling and debating on the issue of regulation in the crypto environment, we’re witnessing the desire to integrate cryptocurrency with government systems and with our lifes.

*In my other articles i will pinpoint different Blockchain legal encounters, cover different use cases in the Blockchain market and also dive deeper and cover alternatives for Solidity, the main language nowadays days for writing smart contracts.

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