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Digital currency regulation should be welcomed
The inquiry launched into cryptocurrencies by the UK’s Treasury Committee, to assess their advantages and risks, and ways to regulate new technology, is a major step in the right direction.
As I told The Daily Mirror, regulation into cryptocurrencies is essential, and all work being undertaken by a number of financial watchdogs and lawmakers around the world must be welcomed.
Over the past few days, the Finance Supervisory Service in South Korea (FSS) indicated the government’s cooperation in self-regulation plans; the Swiss Financial Market Supervisory Authority (FINMA) stated it will consider certain cryptocurrency offerings as securities; in addition, the Securities and Exchange Commission of Zambia released a public notice in regard to digital currencies; and in Spain, legislation is reportedly being drawn up to attract cryptocurrency and blockchain firms to the country.
The crucial work being carried out by governments and regulators worldwide in relation to cryptocurrencies should be championed. They are warning investors and potential investors of possible risks and clamping down on criminal activity.
Indeed, since Bitcoin launched in 2009, cryptocurrencies have in fact been in a regulatory vacuum. That said, as financial watchdogs around the world react to the increasing interest and popularity of digital currencies, the lack of regulation will soon be a thing of the past.
Digital currency regulation is absolutely fundamental. There is an imperative need for a solid, global regulatory framework and stringent continual supervision.
A key way to address these regulatory issues is through the exchanges.
Almost all foreign exchange transactions go via banks or currency houses, and the same must happen to cryptocurrencies. Therefore, when running through regulated exchanges, any unlawful activity surrounding digital currencies, such as money laundering, can be challenged more easily.
In order for this to take place, banks will need to open accounts for exchanges, which is why they need to be regulated.
Indeed, with strong regulation devised, implemented and enforced by international financial regulators, there will be additional protection for the rising number of people using digital currencies. Moreover, it will be much less probable for criminals to use cryptocurrencies, less potential risk for the disruption of global financial stability, and additional prospective opportunities for higher economic growth and activity within the countries that introduce the regulation.