Effective Cryptocurrency Regulation Policy and TechnologyAugust 9, 2019
Several US companies are currently hurt by the uncertain regulatory trends prevalent in the US. Ever since the coming of the news about the launch of Libra, several policymakers from across the world have been worried that it might become a source to launder money. The worriers are right about the worry they have.
A report highlighted that “While Libra is centralized, permissioned, trust-based, not censorship-resistant, not scarce, and arguably not even a cryptocurrency at all (though this term is poorly defined), It does offer potential benefits to the world’s unbanked that currently don’t have access to services we take for granted in the West, such as online shopping.”
There are possibilities for Libra to be used to launder money. It can be used to finance terrorism and also to destabilize the fiat currencies and therefore, the Central Bank. Until all of these concerns are addressed, it is not possible for Libra to fully move forward.
With the coming of Libra, a more significant issue concerning the lack of regularity in the cryptocurrency world has come in to picture. The differences between several cryptocurrencies and Libra is more than just the Semantics. Policymakers should be clear about how to differentiate between the potential of Libra and other cryptocurrencies, and they need to define how to think about the overall regulation.
Libra will be providing permission to 100 members who will be centrally managing and controlling Libra. This will be a closed system and will be serving as a centralized intermediary. The value of the Libra will as well be pegged to several government-backed currencies. With time Libra may compete directly with the fiat.
Ripple is using the XRP ledger to ease out friction from several financial services, thereby alleviating high costs when it comes to cross border payments. Some companies are using ledger technology to create alternative business models. Therefore, with the different purposes ruling different tokens, the regulations should be set accordingly. The US needs to come up with policy and technology, which will not put the US companies at a disadvantage in terms of cryptocurrency regulation.
The year 2020 will be bright for the cryptocurrency ecosystem. Probably, Libra will launch at 1 GBP, and there will be some decently fresh excitement making it to the market. On the other hand, regardless of whether regulators are working for the better or worse, investors are continuing to buy when cryptos are low and are selling when it is high.