Global regulation of cryptocurrencies is necessary

The cryptocurrency market is growing besieged of regulators and financial institutions in different countries around the world. Many regulators have views on this asset class as they consider it to be quite dangerous for the economic stability of countries and even if they do not say so directly, one of the main purposes is to ban it or restrict it so that it does not create major problems.

This situation is experienced all over the world. For example, the UK Financial Conduct Authority recently said that rules for cryptocurrencies were necessary. The fact is that these rules could not be local but global. This suggests that global regulation is the goal of controlling the use of cryptocurrencies and the market in general, as the issue of cryptocurrency-related companies such as Binance and other digital asset exchanges has been addressed.

It seems that the main purpose of these regulators is to “keep the market clean”By stopping any kind of active or economic activity that puts investors at risk, but also financial stability. For example, cryptocurrencies have long been in a regulatory gray area and this needs to stop as these loopholes lead to a large number of people using cryptocurrencies for illegal activities.

Global regulation is the solution

This is not the first time that global regulation of cryptocurrencies has been mentioned. This topic has been discussed countless times by regulators around the world. The idea of ​​global regulation, at least from this point of view, could eliminate more problems in the market, because if all countries set identical regulatory standards, there would be no room for crime.

The fact is that it is not easy to develop such a regulation. If we look at the case of cryptocurrency companies that are unregulated, there are really many cryptocurrency companies in the world. And an important point to consider is that many countries have not worried too much about establishing real controls to combat criminal activities such as money laundering. In fact, while some countries are looking for alternatives to regulating cryptocurrencies, others, like El Salvador, have approved them as legal tender.

But it is not just about rules that are as strict as those applied by China. In the case of the UK Finance Commission, it has carefully examined the risks of cryptocurrencies, but also the opportunities associated with this type of asset. This approach took into account social inclusion, the need for regulatory change and the overriding need to promote issues of technology used in the economy.

Although the possibility of replacing fiat currencies with decentralized cryptocurrencies is not the main issue, or whether these work legally together as in El Salvador, some revisions have been requested. It will consider the positive and negative aspects of this process to determine the next regulatory step.

And although the possibility of developing central bank money was not directly discussed, it is a topic that has certainly been quietly addressed. Projects of this type have begun to develop in different parts of the world, with some analysts claiming that central bank cryptocurrencies are the future of the economy.

Protection is needed

Cryptocurrencies are highly volatile assets, which is why it is necessary to protect against crashes. If we look at the position of the Financial Conduct Authority, we realize that recent years have not allowed Binance, the world’s leading cryptocurrency exchange, to function normally because such platforms are not covered by the rules. But now, almost a year later, Spain, France and Italy have allowed Binance to operate, which could be a positive step for the market.

It is clear that governments must protect the traditional economic structure, and it is hoped that the security of users can also be preserved. But today, with the latest market crash, the search for regulation to protect users is increasingly important.

It is impossible to deny that there are certain risks associated with cryptocurrencies, but neither can it be denied that they have certain benefits. For now, the challenge for regulators is to find a balance between allowing the use of cryptocurrencies and protecting economic stability. That is why very few countries have made progress with regulation because regulating this type of asset is more difficult than it seems.

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