Problem: Cryptocurrency Does Not Fit Easily Within Our Regulatory SchemeJuly 20, 2019
Crypto enthusiasts repeatedly refuse the regulatory write-ups. It was presumed that cryptocurrency would be a fad and it was felt that the cryptocurrency would collapse under the weight of its expectations.
Paul Krugman predicted that the Bitcoin would be yet another bubble which will burst very quickly. However, the cryptocurrency does not seem to go away as a fad.
Jerome Powell, in his semi-annual address to the House of Representatives in the Financial Services Committee, concluded that the current rules and regulations might not suit digital currencies. He stated, “It’s something that does not fit easily within our regulatory scheme.”
Several national and international players are getting pretty serious about the regulation of cryptocurrencies. The regulations are, in a way going to the very core reason for why the cryptocurrency came in to being. Ultimately, the pseudo-anonymity and the non-permissioned systems will be curtailed with regulation. With a little compromise, cryptocurrency will be able to move forward to contribute in a great way to the banking and finance sector.
While regulation is essential, this does not mean that the cryptocurrency should be thrown entirely out of the system. It is quite possible for the traditional financial systems and the crypto startups to co-exist.
The Federal Reserve Chair is intimidating to create an agency, which has exclusive responsibility for regulating the cryptocurrencies. This entity will be one that will be residing in the borders between the public and the private sectors.
After the regulatory intervention, cryptocurrency should be a better version of itself, and it should not be a different and a worse one. The substance and style of legal regulation should adapt to cryptocurrency and vice versa. Rules might involve imposing license, auditing, disclosure, and more.
There might be a need for the code writers to ensure that the identity of those involved in the transactions is maintained anonymous; however, their details should be stored in a retrievable format in a separate register. Conditions will be imposed on constraints about data storage and limited confidentiality. These will be done equitably in a way to protect and balance the individual rights of investors.
In the current regulatory scenario, cryptocurrency will be able to survive only if the compromises are made and the tradeoffs are made between the regulators and the cryptocurrency agency. This is in a way to ensure a genuine alternative to mainstream money and related transactions.