Cryptocurrency Regulation: Where We Stand Today

One of the protracted issues in the world of cryptocurrency is cryptocurrency regulation. From the very onset of cryptocurrency, in 2008, its regulation has always been a contentious issue. Cryptocurrency in its nature prides itself in not having to be regulated as a unique selling point. A cryptocurrency is a digital, decentralized currency; ‘decentralized’ entails non-regulation. Yet government authorities have issues with that, understandably and also not understandably so. There is a lot to discuss on this matter and the dynamics vary from context to context. The bottom line is that cryptocurrency regulation still continues to be a topical matter worldwide. The big question is, where do we stand today regarding cryptocurrency regulation? Let us find out. 

Strong Cases For The Need For Cryptocurrency Regulation

There has now been ample time for the occurrence of incidents that have made regulation seem necessary. For instance, the very nature of cryptocurrency means it is a watertight avenue for criminal transactions to be made. We have seen or heard lots of incidents in this regard. Even on the infamous dark web it is now common knowledge that most illicit dealings are transacted via cryptocurrency. Then there is the issue of fraud and scams especially with regards to cryptocurrency exchanges. One of the most widely known cases was that of FTX. 

Incidents like this make a strong case for the need for cryptocurrency to be regulated. Cryptocurrencies have also been fingered in many money laundering dealings. Another concern is tax evasion. We also have the topical subject of the negative effects of cryptocurrency on the environment. The mining of cryptocurrencies consumes lots of energy thus leading to greenhouse gas (GHG) emissions and other related issues. When you combine all these concerns and more you get an idea of why there is a strong case for cryptocurrency regulation. 

Let us look at where we are today in the world of cryptocurrency regulation.

It Is Still A Mixed Bag – Legal, Partially Banned Or Fully Banned

When you look at countries of the world, you will notice it is a mixed bag. There are countries where cryptocurrency is legal. Then there are countries where cryptocurrency is partially banned. Then in other countries, cryptocurrency is outright banned. There is also another set of countries where there still is no or blurry legal or regulatory framework for cryptocurrencies. This means it is not easy to clearly conclude whether cryptocurrency is those countries is legal or banned (partially or outright). Let us use the example of G20 countries. In more than half of them, cryptocurrency is fully legal. One thing is apparent though when you look across the board globally, cryptocurrency regulation is seriously under the microscope; especially now. 

Increasing Willingness For Collaboration Between Both Sides

There has always been contention between the crypto community and government authorities. Now we are seeing a shift in that feud. There is increasing willingness to collaborate especially pertaining toregulatory matters. It is even interesting to note that this dynamic is currently proving to be a major election campaign matter. Donald Trump has been openly embracing crypto whereas Kamala Harris is being advised to adopt the same stance. Both sides are actually in constant touch with key voices in the crypto space. However, in both camps, there are some who are pro-regulation whilst some are anti-regulation. Regardless, it is clear that dialogue towards symbiotic cryptocurrency regulatory frameworks is steadily opening up more & more.

Cryptocurrency Regulation Is Proving To Be Riddled With Complexities

So we have established that there are opposing views on every aspect of cryptocurrencies. For instance, some are pro-regulation but anti-legislation whereas some are opposed to both. Some see cryptocurrency regulation as an actual endorsement of something they feel is not worth the trouble. Some argue that it is near impossible to properly regulate something that is sophisticated, multifaceted, fast-paced and ever-evolving. Then you also see many arguments on how cryptocurrency should even be classified. For instance, there some who posit that cryptocurrencies should be considered as securities. 

Then again, should that even be the case where cryptocurrencies are being attempted to be fitted into the fiat framework? Or maybe entirely new frameworks should be determined for cryptocurrencies. Alright, how about stablecoins, for instance; how do you navigate that? You see, the complexities are too many and too intricate. Another age old perspective is that regulating cryptocurrency stifles the very innovation that drives it. Thus, overall, these complexities are still much debated resulting in mainstream regulation being elusive. 

We are still going to witness lots of movements in cryptocurrency regulation moving forward. Be it in developing nations or developed ones, there is actually an interesting dynamic. Cryptocurrency regulation is yet to become comprehensive. It comes as no surprise when you consider the complexities of cryptocurrencies. It is even interesting to note than some studies have shown that banning cryptocurrencies seems inconsequential in some cases. Some of the countries with high cryptocurrency adoption rates have official bans in effect. This is one of the many scenarios that indicate that cryptocurrency regulation will continue to be topical indefinitely.