Regulation of the cryptocurrency market: disadvantages and advantages

Regulation in the cryptocurrency market: disadvantages and advantages

The issue of regulation of cryptocurrency takes not only officials – users are also interested in its resolution. Some investors worry about the legalize of cryptocurrency, others are afraid, because, in their opinion, regulation is a euphemistic synonym for restrictions in favor of the state. What is cryptocurrency market regulation? Are skeptics right or legalization opens up new opportunities for crypto users?

What is cryptocurrency market regulation

At the legislative level, cryptocurrencies can be recognized as unknown instruments that, due to novelty, can not obey already existing laws. Then bills are created, seeking to cover the entire cryptosphere.


The second variant of legislative regulation is when cryptocurrencies are presented as either an analogue of existing phenomena (a cryptocurrency as an analog of a usual currency) or an existing phenomenon (a cryptocurrency as a type of existing currencies). Here are made point amendments and additions to the existing bills.


At the executive level, the main problem for regulators is the impossibility of technical control. Thus, it is almost impossible to determine the identity of the person who commits transactions. It is impossible to influence these operations, for example, to cancel them, restrict or verify them.


Problems of regulation of the cryptocurrency market


Taxation can be circumvented if cryptocurrency is used only within the blockchain. For example, a miner can get coins, put them in a wallet, storing money in which does not require the input of personal data and pay only to people who accept cryptocurrencies.


Virtual resources bypass requirements for showing license by the method of changing locations: transfer their data to servers located in the jurisdiction of countries where there is no regulation. Also the requirements for the official registration of crypto exchange stocks, wallets and others are bypassed in the same way.


There are problems with mining. It is difficult to find alone miner, because he uses for his activities stuff that everyone has – a computer and electricity in moderation. Only miners involved in the mining of cryptocurrencies on an industrial scale are noticeable, but they are usually ready to transfer their capacities to more loyal countries.


KYC procedure, users can get around, simply by choosing a stock exchange that does not require the input of personal data or requires, but is in the jurisdiction of the country of which the user is not a citizen.


The second is unlikely at this stage: too different attitudes to cryptocurrencies in different countries. The first is possible in a number of countries. The question is whether it will create problems for investors and crypto users at all.


Regulation of the cryptocurrency market: disadvantages


These are mainly financial losses when paying taxes. For example, the mining tax as an entrepreneurial activity may exceed 40-50%. Also, the incomes of those who earn in income-tax in individuals for cryptocurrencies will usually decrease from 7% to 25%, although there is something beyond these limits.


Anonymity will be almost completely lost, which means that users’ purchases will become known not only to regulators, but also to marketing specialists and so on.


Regulation of cryptocurrency will create bureaucratic inconvenience, the need to get certificates, go through identity verification procedures, sometimes lengthy even for individuals, not to mention legal.


In general, the economic regulation of cryptocurrencies in each country will create cryptographic users of the economic problems faced by other citizens in the economic sphere.


Legal regulation will lead to regular legal problems and so on. This extends to social and even political spheres in some cases.


What are the benefits of cryptocurrency market regulation?


Nevertheless, it should be noted that universal concerns about the prospects for the regulation of cryptocurrency are somewhat exaggerated. Given that cryptocurrency is tightly embedded in the traditional economy, so far few countries are ready, crypto users are unlikely to have significant difficulties.


Implementation takes place very gradually and people have the opportunity to gradually adapt to new requirements. In addition, there is a tendency to recognize cryptocurrency in countries where the systems of functioning of the legal apparatus and financial structures are well established.


Regulators are often financially loyal to crypto users (cancellation of taxes). In addition, the regulation of cryptocurrency has a number of advantages for individuals and opens new opportunities for the development of a cryptocurrency market.


The current mechanisms for protecting investors from unscrupulous ICO organizers are far from ideal and there are no reliable ways to protect investor’s funds during a project crash. ICO regulation solves this problem.


The same applies to cryptoresources, whether it be exchanges, “hot” wallets, exchangers and so on. If, in the absence of regulation, funds are at the disposal of unknown persons, then with the assistance of regulators, investors will receive information about the owners of the resource and guarantees that in the event of fraud scams will be prosecuted.


Also hackers who crack cryptoresources, distribute viral mining programs and other malicious software, for example, to steal keys from wallets, will also be more actively pursued.


For example, the government of the American city of Virginia Beach has allocated $ 500,000 to organize the mining center on its territory. A similar grant was provided by Montana in the summer of 2017. The state government in Vermont has entered into an agreement with the developers of cryptocurrency, which will register real estate.


Subsequently, with the help of the blockchain, operations will be carried out to buy and sell real estate within the state. A similar agreement, by the way, has already been concluded with one of the blockchain projects in Sweden.


There are many such opportunities for cryptocurrency and everyone benefits from using them. Developers receive guaranteed support for their currency and a very reliable one, while the state receives a transparent technology for accounting for property.


All of the above will ensure the stability of cryptocurrency, as some of them will be supported by specific material or intellectual values that are in demand among the masses of people. Accordingly, the course will become less mobile.


Reducing volatility, in turn, will attract large investors. Moreover, some of them, obviously, will invest in the development of the blockchains of science, education, and others already mentioned as promising directions for the development of the cryptosphere.


Thus, a reasonable regulation of cryptocurrency will not only be detrimental to the cryptosphere, but will develop it and allow all blockchain capabilities to appear.


Many of them at the current stage of development of cryptocurrency are probably unknown and therefore regulation will open not only social and financial, but also technical perspectives, many times superior to those that we are seeing now.

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