Cryptocurrencies became the first mass approbation of blockchain technology. The use of cryptocurrencies and blockchain technology has become one of the responses to the opportunities and challenges of the development of the global economy, however, at the moment, countries are not sure about the position they take on the issue of cryptocurrencies.
Today, the scale of the use of cryptocurrencies does not give reason to believe that most of the subjects of the world economy are moving away from using fiat money in favor of digital money.
Does crypto regulation affects business?
Some experts in financial regulation believe that the cryptocurrency regulation system should be comfortable for business. To achieve this goal, they propose to take the following steps:
- adoption of a unified glossary of terms in crypto-economics,
- creation of the Eurasian Economic Commission (EEC) leadership for the ICO,
- development of EEC recommendations on the risks of AML / CFT and the tax base, taking into account international experience and OECD standards.
Thus, the task of forming a common financial market of the Eurasian Economic Union (EAEU) by 2025 provides for the coverage of the banking and insurance sectors, as well as the securities market. From this position, it is important to create conditions for the development of financial technologies, as well as to envisage a scenario with a possible expansion of the use of cryptocurrencies within the regional and global financial market.
Why digitization is important
Digitalization is another topical area of development. The main directions include the digital transformation of economic sectors, markets for goods and services, capital and labor, regulatory mechanisms in the EU; development of digital infrastructure, and ensuring the security of digital processes.
The essence and economic content of blockchain technology and cryptocurrencies suggest considering them in the context of two directions:
- as a source of economic growth for states in the new digital economy;
- as a risk factor for the stability of the traditional monetary system.
The issue of developing a system for regulating the circulation of cryptocurrencies is directly related to understanding its essence and fixing the corresponding term in national legislation. By defining cryptocurrencies as a means of payment, regulators are faced with a dilemma between private and fiat currencies, which is why many countries view cryptocurrencies as a type of digital asset. The need to comply with AML / CFT requirements, in turn, sets the task of ensuring deanonymization in the circulation of cryptocurrencies.
Some experts believe that since the history of the crypto economy is supranational in nature and cannot be regulated by national legislation, then two legislation should be adopted:
- linking an individual with his digital profile and protecting the rights of an individual to a new type of property (digital profile);
- interaction between fiat money and cryptocurrency.
How regulation can affect the crypto world
The European Commission has proposed to introduce mandatory registration or licensing of the activities of cryptocurrency exchanges like Cryptology and companies providing cryptocurrency wallets to users. It is planned to create a central database with information on users of digital currencies and expand the classification of crimes to the level of all payment transactions, including transactions with virtual currencies.
There is also a possibility of a significant change in the structure of the financial market and, as a consequence, the emergence of new technologies up to the disappearance of intermediation in the form of banks, which, as a result, can significantly change the influence of the transmission mechanism of monetary policy.
Most countries are currently at the stage of monitoring activities related to the circulation of cryptocurrencies and the development of related technologies. Within certain jurisdictions (Switzerland, Malta), we can talk about the development of a sufficient regulatory framework that allows companies and citizens to carry out transactions within the legal framework.
What is soft law?
Among countries, the “soft law” method has become widespread, in which government bodies are limited to informing citizens about the risks associated with investing in ICOs, cryptocurrencies and derivative financial instruments in which cryptocurrencies are used as the underlying asset (Australia, UK, Germany, and the Netherlands).
The issue of regulating crypto assets is important because of its influence on the development of the crypto economy and its implementation in everyday life. Experts have very different opinions on the future status of virtual currencies, but nevertheless, transactions and other operations with bitcoins are already being successfully carried out around the world. And now there is an urgent need to develop a legislative framework on the regulation of cryptocurrencies.