It’s Unclear Which Paradigm Cryptocurrencies Fit IntoAugust 4, 2019
Mike Crapo, the US Senate Committee Banking Chairman, recently stated that the United States would not be able to ban Bitcoin. He stated, “I’m pretty confident we couldn’t succeed in doing that.”
The UK Financial services have warned potential investors that Bitcoin and other kinds of cryptocurrencies do not have an “intrinsic value.” This warning from the UK has been perceived by many as a move by the UK towards banning Bitcoin.
Christopher Woolard, FCA’s executive director of strategy and competition, stated, “This is a small, complex, and evolving market covering a broad range of activities. Today’s guidance will help clarify which crypto asset activities fall inside our regulatory perimeter.”
In a bid to protect investor interest, the FCA banned some of the cryptocurrency-related investment products. It was stated that cryptocurrency derivatives and exchange-traded notes (ETNs) were “ill-suited to retail consumers who cannot reliably assess the value and risks.”
Several important clarifications have been provided in the latest FCA policy guidelines. Bitcoin and Ethereum considered both of these cryptocurrencies to exchange tokens and requires that these tokens adhere to the anti-money laundering requirements.
China seems to be inclined to change its opinion on the Bitcoin. Bank of China, owned by the state, has posted infographic, which was pro-bitcoin. The infographic was posted on its website, and it explained the history of the Bitcoin and about how cryptocurrencies work. This infographic has been released shortly after the Chinese court legally recognized Bitcoin.
Jennifer Campbell, co-CEO of Tagomi, spoke about the need for newer regulations for cryptocurrencies. She stated, “We need more clarity on what the regulatory paths should be…There should probably be some sensible legal reclassification of blockchains and cryptocurrencies, because a lot of the current regulation is a force-fit, and it’s unclear which paradigm cryptocurrencies fit into.”
Hiromi Yamaoka, stated, “If Libra becomes more widely used than the sovereign currency of a particular country, the effect of monetary policy may be severely undermined.” Yamaoka did not exclusively comment about whether Libra would succeed as a cryptocurrency, but he stated that its adoption might accelerate the capital fight leading to the more natural method of moving their money in countries where the trust is low in their own currencies.
If there is a substantial market trust for their currencies, then those countries might not face any problem. Despite all, the coming of Libra will alert all policymakers to discipline themselves, thereby refraining from decisions which will undermine the value of their currencies.