NEWSLaw and Legislation

Is It the Right Time to Regulate by Law, Cryptocurrencies, Especially Bitcoin, Ethereum – or is it Premature and More Damaging?

Is it bubble or not?

Of course there is a question: How to make the FinTech and Cryptocurrencies industry more self-disciplined, as that self-discipline needs to be promoted and rewarded in order to build Globalized Smart Economy. We are witnessing the continuous phenomenal performance of digital currencies, as for today its market cap exceeds $160 Bln at its previously unseen record high.

But some experts predict that continuous overly enthusiastic bullishness of digital currencies is a sign of impending bubble, similarly to the dot.com bubble in 90s.

There is in the market another bull run in form of ICO (Initial Coin Offering) fewer!

The growing world of ICOs and fundraising that now exceed Internet Angels and Seed Investing. It also exhibits bubbly characteristics because they are attracting billions of dollars in cash from investors who may not fully understand what they are getting themselves into.

Several ICO projects are phenomenal, bringing intrinsic real world additional value and correlated to its number of users, will stay, grow and will offer good trading opportunities for investors.

But many of ICOs just are money grab shells presenting their scam story in their White Paper and they are going up not because its going to work but because of speculation.

Experts believe that there is not if, but just when, the bubble will happen and a lot of investors will lose their money, and there will be no country or company they can ask to honor it. Hopefully they only have invested the money that they can afford to lose.

There are also other dangers linked by digital money, particularly Bitcoin, as due to its high level of anonymity provided by cryptocurrency transactions, makes it extremely easy to be used for buying and selling of illicit services and goods on the dark web, money laundering, ransom payments, terrorism financing, drug cartels and other organized crime syndicates.

Of course lawmakers, regulators and legislation need to establish policies and regulations in place as much as possible to protect the currency and people from the risk. But it should be a striking balance so as not to hinder and stifle the further development, adoption and use of digital currencies, such as Bitcoin.

What is going on?

Congress plans to regulate cryptocurrencies through newly proposed bill: S.1241. It seeks to introduce a provision that would require anyone in possession of more than $10,000 in cryptocurrency to disclose it when passing a U.S. custom checkpoint.

This and other proposed provisions of the bill are at least problematic and will have implications which could lead to dividing digital currencies into “complaint” and “non-complaint” categories, or even risk to marginalize Bitcoin and Ethereum.

The Bitcoin Foundation Executive Director LLew Claasen denounces as “premature decision” to oversee cryptocurrency. So the Foundation has retained the Ciric Law Firm, PLLC for legal counsel to advice in its effort to fight against increasing federal and state regulation in the U.S. The effort is a response to the planned introduction of a bill that aims to bring Bitcoin into the scope of US money-laundering enforcement agencies.

Just as the FinTech (Financial Technology) use of cryptocurrency was stifled in New York by the adoption of the so called Bitlicence, will also have a similar negative effects.

The point is that by regulating the technology prematurely and too early, that will do harm to very innovative businesses and technologies.

Among the countries in the world there is different approach to digital currency, it ranges from regulatory friendly approach ( Japan, South Korea, Singapore, Australia, Canada, Russia…) to neutral (Switzerland ) and to more stifling ( USA) and even some states ban all cryptocurrencies.

-Australia is heading towards legalizing Bitcoin and other crypto. It’s a question whether to embrace the digital currencies or risk the future competitiveness in a lot more than $160Bln a year financial services.

As Senator Hume comments: Blockchain development in the Australia will be a major contributor in the technology revolution, so we are going to lead not to follow. Our nearest competition regulatory friendly countries like Singapore, Japan, South Korea, Hong Kong continued demonstrating exponential growth in their economy.

-The Russian Finance Ministry will finalize proposal for cryptocurrency regulation, so the cryptocurrency purchasers will be required to prove their identity.

But aside from other things Bitcoin is a positive technology, and regulators should not view it as something dangerous.

Cryptocurrencies are here to stay, grow and have mostly positive impact in all aspects of our life.

Recent, positive, optimistic examples of blockchain technology implementation.

  • In Russia just today Ethereum strikes a deal with Russian State Development Bank, and is part of a series of steps that Russia are taking towards blockchain implementation.
  • Moscow Stock Exchange welcomes cryptocurrency trade, as President Vladimir Putin signals the country’s willingness to open its digital wallet.
  • ArabianBusiness has revealed that UAE Exchange, remittance operator with some 800 offices across 31 countries, is looking to partner San Francisco based FinTech firm Ripple to facilitate instant international money transfers.

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