Financial Instability Of The Cryptocurrency Industry Can Only Be Helped With RegulationJanuary 2, 2019
The self-regulatory powers of the cryptocurrency are notable. This is one reason why Japan continues to be the forerunner of cryptocurrency adoption and regulation.
Several blockchain technology-based projects, cryptocurrency exchanges and startups in Japan accept Bitcoins.
While the rest of the world is apprehensive to adopt cryptocurrency and related technology Japan has forever been the patron of this payment method, and they are the earliest adopters of this technology.
Mt. Gox used to be the largest cryptocurrency in the whole world, and it has been around since 2014. The exchange was handling nearly 70 to 80% of Bitcoin-based transactions that took place in the world. The company suffered a disastrous blow when they lost 850,000 Bitcoins in the year 2014. The CEO was arrested for misappropriation and fraud. Money is now slowly being returned to the primary investors.
While decentralization was the major goal for the coming of cryptocurrency, regulatory bodies have set their foot into the ethos and functioning patterns of the cryptocurrency exchanges. The Payment Services Act has legalized cryptocurrency as a form of payment. While South Korea and China have banned initial coin offerings, it is not clear as to in which direction the Japanese government might choose to deal with initial coin offerings.
Not only with Japan, But Countries across the world are also improving their regulatory standards, and they are placing emphasis on KYC and AML laws. The FSA of Japan has all the power to authorize a self-regulatory body for the cryptocurrency.
Regulation is not the problem threatening the cryptocurrency industry, rather the need for regulation is that which is seen in the industry. Investors will develop more trust with regulation. It is only with due regulation robust economic opportunities offered by the cryptocurrency industries can be adopted at a mass level.
Governments are interested in encouraging innovative opportunities while at the same time canceling off the risks associated with it, which is a justifiable stand. Regulation is important to keep away from the financial instability of the cryptocurrency industry.
Regulation should set the working framework to set the required standards to ward off the instability factors in the cryptocurrency industry. The concerns in every jurisdiction vary in a bit, and the regulatory framework should be customized to suit the requirements in the respective jurisdiction.
The market should be regulated for transparency in transactions, trading, custody and settlement, systems integrity and cybersecurity. It is also important to promote international cooperation between futures and the market regulators. It is up to the standard setting bodies to make things works in a way to improve the trust in the cryptocurrency industry.