The Age of Unregulated Cryptocurrency Is Coming to an End
New regulations are being proposed for cryptocurrency all over the world. It’s too soon to know exactly what effect this will have on the digital currency, but change is coming.
The cryptocurrency market rose to its peak in 2017 when bitcoin hit $20,000. But soon after came the great plunge, leaving many to wonder if cryptocurrency was dead. However, it gained new attention when Facebook announced its intention to enter the digital currency market with Libra.
With this new attention shining on cryptocurrency, governments around the world have begun proposing new regulations. Although bitcoin was created with the idea of a borderless currency, the reality is a wide range of regulations differing from country to country. New regulations on digital currency are popping up all around the world. And what this means for the future of bitcoin is anyone’s guess.
- The United States. US senator, Paul Goser, has proposed a new bill called the Cryptocurrency Act 2020. This bill would categorize cryptocurrency into three main groups: cryptocurrency, crypto-commodities, and crypto-securities. The purpose is to assign each of these types to a regulatory body that would have authority over its assigned group.
- European Union. This January, the EU is implementing the EU Fifth Anti-Money Laundering Directive (5AMLD). Its main purpose is to prevent money laundering and terrorist financing.
- The United Kingdom. Although the UK is leaving the European Union, they have announced they will still implement 5AMLD.
- Mexico. Mexico’s new regulations may prove beneficial to investors as transparency in interest rates, fees, and risks will be required.
- Russia. Russia is poised to adopt new laws that will allow authorities to oversee crypto-assets. If these work as planned, Russian companies may have more confidence to use cryptocurrency, knowing they can remain compliant with finance and tax laws.
There are some common benefits among these new and proposed government regulations.
- Increased transparency to the consumer will help to increase confidence and reduce consumer risk.
- Requirements for verified identity will crack down on financing terrorism and money laundering.
- Core regulations will help to avoid confusion and bring clarity to the trading of digital assets.
What will the future bring?
This one is a hard call to make. If financial experts could truly see into the future, they would have all bought bitcoin in 2009. However, what the experts can tell us is that these new regulations will increase consumer confidence in the safety of digital currency.
With more confidence, businesses and consumers may be quicker to adopt cryptocurrency. Thereby rendering previous predictions of the death of cryptocurrency, dead wrong.