Cryptocurrency at a World's Glance
While cryptocurrency may seem like a fad that has come and now gone, it is still present and countries around the world are still struggling to decide on how to deal with it. Cryptocurrency does not seem to be going away any time soon as it has sustained despite significant drops in value. The important matter to discuss is where countries stand in 2018 on regulating cryptocurrency.
Australia took abrasive action against cryptocurrency with strict regulation of cryptocurrency exchanges. According to Coin Geek, the regulation will require cryptocurrency exchanges to comply with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. With this regulation, domestic exchanges must create and run an anti-money laundering and counter-terrorism financing program to identify, mitigate and manage money laundering and terrorism financing risks. This will allow customer identities to be identified and verified. This regulation is not immediately put into place, there is some breathing room for companies to adjust and pivot to conform to the new rules, but by May 14th, all business owners working with cryptocurrency must register their companies. If they do not, they could face criminal or civil penalties.
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| Source: CryptoStreet |
Starting off with the United States. There has yet to be any laws passed, but the general sentiment among the Treasury is that there does need to be regulatory measures put into place. However, then the decision has to be made whether cryptocurrency will be treated as currency or securities according to Bitcoin Magazine. What may seem insignificant to the average citizen is actually extremely concerning among non-US investors. If cryptocurrency is treated as a currency in the United States then it could be regulated at the national level. However, if it is treated as a security then the regulation would fall to each individual state. This would be a logistical nightmare in terms of investing.
Canada is an example of a country who has set their stance on cryptocurrency and it is a positive one. They seem to welcome cryptocurrency, but have set guidelines and made it clear that cryptocurrency is not legal tender in Canada. The guidelines included that regulators would look at each cryptocurrency individually. This means that not all cryptocurrencies will be regulated the same due the fact that some hold more value than others. The example in Bitcoin Magazine went as follows: a coin/token you purchase to play a video game would not count as a security and thus would differ from a coin/token you purchase that is tied to future profits or the success of a business. This is just one of the many guidelines set by Canada, but the overall theme was to better clarify what would be regulated and what would not be.
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| Source: CCN |
Shifting from Australia, Switzerland is looking to become, as their economic minister Johann Schneider-Ammann told reporters, "the crypto nation." Unlike most countries, they are incredibly fond of cryptocurrency and see it playing a major role in the future. According to Bitcoin Magazine, Jörg Gasser, state secretary at the Swiss finance ministry, is quoted as saying, "We want it [the ICO market] to prosper but without compromising standards or the integrity of our financial markets." Whether the goal of have the ICO market prosper without compromising the integrity of their financial markets is possible is something they must figure out, but one that most countries don't see as a reality.
According to Reuters, most of the efforts attacking money laundering fall on the cryptocurrencies themselves. However, taking Australia as an example, regulating the exchanges would be more effective due to the level of anonymity for each. A privacy coin's audit trail is completely anonymous and is practically impossible to track due to the nature of blockchain technology. However, a cryptocurrency exchange does have the ability to view its own trades and digital wallet balances. It makes sense that in terms of protecting the economy, regulating the exchanges would be more effective. It is when the people who are attempting to money launder are exchanging their cryptocurrency into fiat currency that we can catch them. Thus it is at this step that regulating seems the most effective. All we know at the moment is that many countries have not settled on how they plan to deal with cryptocurrency and in addition, there is no international agreement on what the best solution.
I think it was really great that you talked about how different countries feel about cryptocurrency because there is definitely going to influence. It'll be really interesting to see if Switzerland is able to implement cryptocurrency without compromising their economy. I'm sure if they are able to do so successfully, other countries would begin to do the same.
ReplyDeleteCryptocurrency is taking countries by storm and it is very interesting to see how their governments are reacting. Being a small investor myself, I am completely against the United States from regulating it and accepting it as legal tender. However, I do believe they need to add guidelines to follow so people cannot launder money or hide it.
ReplyDeleteYou offered an amazing explanation of how cryptocurrency is being handled by different countries, and some of the advantages and disadvantages of different approaches. I never really realized how many of these questions involve value tradeoffs.
ReplyDeleteI'm rather surprised at the Swiss (with their old reliance on traditional currencies) making moves in support of cryptocurrency. Given this, it seems that the tide may yet shift in cryptocurrency's favor.
ReplyDeleteAs other countries are completely fading away cash, the U.S. seems to be stuck in the old school credit card and dollar bill transactions. However, because of the nature of cryptocurrency, I think it is really hard to regulate and prevent people from using it to launder money.
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