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Global regulation for cryptocurrencies is needed

The cryptocurrency market is growing besieged by 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 although they do not say so directly, one of the main objectives is to ban it or to restrict it so that it does not generate major problems.

This situation is experienced all over the world. For example, Britain’s Financial Conduct Authority recently said rules for cryptocurrencies were needed. The fact is that these rules could not be local, but global. This posits that global regulation is the goal in order to control the use of cryptocurrencies and the market in general, as the issue of cryptocurrency-related companies, like Binance and other digital asset exchanges, has been addressed.

It seems that the main objective of these regulators is to “keep the market clean” by stopping any type of asset or economic activity that endangers investors, 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 large numbers 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 several problems in the market, because if all countries set identical regulatory standards, there will be no room for crime.

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

But it’s not all about regulations as strict as those applied by China. In the case of the British Treasury Commission, it has closely 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 imminent need to advance issues of technology applied to the economy.

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

And while the possibility of developing central bank money was not directly discussed, it is a topic that has certainly been quietly broached. Projects of this type have started 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 very fluctuating 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 last year they did not allow Binance, which is the world’s leading cryptocurrency exchange, to operate normally because such platforms do not are not in the regulations. 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 safety of users can also be preserved. But today, with the most recent market crash, the search for regulation to keep users safe is increasingly important.

It is impossible to deny that there are certain risks associated with cryptocurrencies, but it also cannot be denied that they have certain advantages. For now, the challenge is for regulators to strike a balance between allowing the use of cryptocurrencies and protecting economic stability. This is why very few countries have made progress on regulation, because regulating this type of asset is more difficult than it seems.

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