Despite Fears, Many Countries Yet to Heavily Regulate Digital Currency
It’s no secret that the digital currency market is prone to being highly speculative. In a world where information travels faster than ever, governments can seem as indecisive as the people they represent when it comes to whether to regulate digital currency.
Additionally, the existence of digital currencies is creating a phenomenon where investors across the world await the regulatory decisions of countries that they may not otherwise engage with.
For example, Canadian investors await the verdict of South Korea’s long-standing policy debate regarding the legality of digital currencies. While the topic may not be typically interesting to the average Canadian, investors are forced to pay attention; decisions from major digital currency players like South Korea often have a noticeable consequence for the market.
Singapore: no strong case to ban trading
A country subverting current fears of a global ‘crackdown’ is Singapore, where the government recently indicated the lack of need for strict digital currency prohibitions.
On February 7th, 2018, Singapore’s deputy prime minister and Monetary Authority of Singapore (MAS) chairman, Tharman Shanmugaratnam, provided a formal reply to the Parliamentary Question on ‘banning the trading of bitcoin currency or cryptocurrency.’
In the reply, Shanmugaratnam expressed a lack of need for current action against digital currencies, acknowledging that they are a new form of technology.
“Cryptocurrencies are an experiment,” he said. “The number and different forms of cryptocurrencies is growing internationally. It is too early to say if they will succeed. If some do succeed, their full implications will also not be known for some time.”
Further, Shanmugaratnam noted that the MAS continues to investigate the potential risks of digital currency, and continues to fight against anti-money laundering and terrorism financing. However, this has not resulted in a need for any bans on digital currency trading.
“As of now, there is no strong case to ban cryptocurrency trading here,” he said.
European Central Bank: low priority
While EU regulations loom over the digital currency community, recent statements from the European Central Bank (ECB) indicate a less ‘active’ stance than otherwise anticipated.
In a conversation with the CNBC on February 7th, 2019, ECB chief supervisor, Daniele Nouy, said that digital currencies are not high on the European Central Bank’s list of priorities.
“We scrutinize the issue in a regulatory perspective, we are ready to do something if it was needed,” said Nouy. “So far it’s not exactly very high on our to-do list.”
In January 2018, Luxembourg Minister for Finances, Pierre Gramegna, stated that the prevalence of digital currencies will lead to some form of regulation in the future.
“Virtual currencies are there to stay, they bring added services, they are convenient, they are simple, and so consumers love them. So I think the regulators, and the countries, will have to monitor it, and will have to regulate it to a certain extent,” he said.
“Europe will probably handle it together because, obviously, it’s something that touches upon the single European market so it has to be done at European level.”
United States: a balanced response
The United States Committee on Banking, Housing and Urban Affairs (CBHU) held a hearing on February 6th, 2018, on the topic of digital currency regulation.
While many feared for the outcome, the community largely praised the result of the hearing. The result primarily concerned itself with protecting groups at risk of fraud and did not suggest any overbearing regulatory action for traders.
“We owe it to this new generation to respect their enthusiasm for virtual currencies, with a thoughtful and balanced response, and not a dismissive one,” said Chris Giancarlo, Chairman of the U.S. Commodity Futures Trading Commission.
Coin fans – Thx 4 ur enormous response 2 my recent US Senate remarks. Lol. As you invest remember: caution, balance & DYOR.
— Chris Giancarlo (@giancarloCFTC) February 8, 2018
The digital currency community heavily praised Giancarlo after the hearing. Before his statements, Giancarlo had around 2,000 followers on Twitter; now he boasts 45,000 followers as a result of a community-led campaign to express gratitude.
Canada: a pilot, but no promise to regulate or not
Canada has largely avoided making any threats or promises to heavily regulate digital currency.
Instead, the majority of engagement from Canadian regulators focuses on the underlying technology behind most digital currencies, blockchain. In January 2018, the Government of Canada launched a working proof-of-concept that aims to explore the potential of the Ethereum blockchain for government use.
While some statements from Canadian officials do call for regulation, even these statements do not seek to prevent trading. Instead, statements from Canadian regulator, Jason Roy, call for a ban of digital currency, ICO, and binary options from the Google ads platform, in the same vein as Facebook’s recent policy update.
Despite the examples listed here, there are still several countries currently imposing, or threatening to impose, regulations that digital currency proponents view as being overly strict.
On the other hand, when considering the global platform, many countries like the U.S. are not taking the harsh action that the market previously feared.
Ultimately, as the digital currency industry continues to foster its legitimacy and grow in popularity, regulation will remain an important topic of discussion. However, if treated in a balanced way, this regulation may not necessarily have the negative impact that some fear. Instead, it could allow for a better relationship between governments and the digital currency community.
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