Calls for crypto regulation gather momentum around the world
As the crypto market matures and gains relevance within the global economy, executives, investors and even public bodies worldwide are calling for clearer crypto regulations.
In 2017 we witnessed the ‘Bitcoin boom’, with skyrocketing prices and major attention driven towards cryptocurrencies.
Since the Bitcoin Boom in 2017, the crypto market has exploded with Initial Coin Offerings — the controversial ICOs — with many of those projects, under the flag of the crypto revolution, proving to be nothing more than artifice designed to trick eager investors into putting money into a business that was never realised.
Nevertheless, the high number of fraudulent ICOs is more a representation of dubious morals than a testament of the actual revolutionary nature of blockchain. The challenge posed by the introduction of cryptocurrencies and tokens has allowed for an expansion of investment opportunities for new groups of investors, as well as giving millions of unbanked people around the world an alternative means of finance.
This realisation is slowly spreading among financial regulators, which are now exploring the ways that crypto technology can be integrated into the widerfinancial and regulatory market framework.
In recent months, with the rise in the popularity of tokenised securities — a SEC-compliant class of digital assets, comparable to equities stocks — the theme of regulation is spreading across the crypto space.
At the moment, although the EU does not present a unified framework regarding cryptocurrencies — regulations vary by state members — the European Central Bank has shown plenty of initiatives in exploring ways to regulate and manage cryptocurrencies.
In the beginning of 2019 alone, two major European regulatory bodies, the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) have publicly called for better assessments of crypto technology and its impacts in order to develop appropriate regulations.
In an official statement, the EBA said it is calling for regulations to protect investors above all, and has asked the European Commission for a comprehensive analysis to assess whether unified crypto rules are needed across the region. In addition, the ESMA’s recommendations advise the EU Commission on the current regulations which can be suitably applied to crypto assets.
In the emerging markets scene, where the positive effects of cryptocurrencies are more tangible, calls for regulation have also risen, with movements urging authorities to work on implementing and regulating cryptocurrencies.
In India, where the legalisation of digital currencies has become a divisive topic, the Reserve Bank of India (RBI) has put a ban on banks and any regulated financial institutions from “dealing with or settling virtual currencies”. The move in April 2018 sparked backlash from crypto enthusiasts, who defend their right to enjoy alternative finance means.
The CEO of India-based Cryptocurrency Exchange WazirX, Nischal Shetty, kicked off a social media campaign to attract the attention of Indian financial regulators over the need for ‘positive regulation’ ofcryptocurrencies, which provide the Indian population with an innovative, necessary and accessible tool for economic growth: “Please bring positive regulations in crypto and over 5 million crypto Indians will be thankful to you. Youth of India have found a new way to make wealth & this is especially important when there are not enough jobs for everyone,” he said.
Crypto experts have already stated that 2019 should be “the year of crypto regulation” and represents an important move towards allowing the blockchain revolution to truly thrive and improve financial practices around the world.
“Regulations are a necessary step to take the crypto industry to the next level. We have seen numerous cases of fraud and scams in the ICO space in the last couple of years, which has put off institutional investors and created a sense of distrust in crypto projects. However, with a regulatory framework in place, cryptocurrencies and tokens are no longer products of mere speculation. They have become real assets. It benefits both the investor side and companies themselves, and shows the maturity of the crypto market,” says Stefania Barbaglio, Director at Cassiopeia Services, leading crypto & blockchain PR.
Keep an eye out for upcoming interview with Nischal Shetty about the crypto scene in India and the impact of cryptocurrencies on emerging markets. Follow us on @cassiopeia_ltd and subscribe to our YouTube channel FinancialFox.