Cryptocurrencies were born in an unregulated landscape, with very few people paying attention initially. The first transaction using bitcoins to buy real-life goods in 2010 exemplifies the volatility of this market, especially amid the evolving landscape of cryptocurrency regulations. A Florida man needed a lot of convincing to buy two pizzas for 10,000 BTC, which were worth USD 41. Nowadays, the same amount is worth about USD 250 million. It shows how volatile this market can be.
The crypto market has come a long way. One can use cryptos to buy cars, properties, or a cup of coffee. Crypto assets are now used as investments for individuals, companies, and central banks. The crypto market isn’t immune to the growing pains. While the popularity of cryptos rises, statistics of financial crimes go the same way.
Such a situation calls for transparent regulatory measures and updated legislation. Yet, each country has its own way. It creates a legal maze for those operating in this market at the international level. Here’s how you can find your way through it.
Safety Issues
Investing in the crypto market can be a dangerous business. Cases of theft, fraud, deceptive advertisements and misinformation aren’t uncommon. Still, only about 33% of the countries apply protective measures for consumers.
The UK is working on legislation that demands crypto identity verification for transactions. Implementing Know Your Customer (KYC) policies is essential to prevent money laundering. The registration of those assets also helps prevent theft.
In South Korea, the government demands all users get an information security certificate. The Korea Internet and Security Agency issues the certificate. Countries like Japan and Australia already have laws to punish fraud and misinformation.
Legality
Regulatory efforts work on four fronts: consumer protection, licensing, taxation and AML. Yet, there’s a huge gap between crypto regulation across developed and developing. Over 60% of advanced economies already have legislation surrounding all four categories. This number drops to 11% among developing countries.
The lack of regulation hasn’t affected the growth of cryptos in those countries, though. About 60% of the countries with the most users have banned this asset, either wholly or in part. The regulatory gap across countries creates a grey zone where financial crimes thrive. Worse still, the long-term effect of such a gap can threaten financial stability.
Adjusting the Compass
Information and collaboration are keywords when talking about safe crypto investments. Stakeholders must follow every development of the regulatory landscape. Also, it’s necessary to engage with legislators towards more effective policies. The collaboration between the public and private sectors creates flexible but transparent frameworks.
In India, advertisers must also make clear what risks involve crypto investments. This approach helps consumers to make more informed decisions and fight misinformation. Legal transparency is also beneficial for cryptocurrency exchanges. Coinbase Global enjoyed a considerable share rise after a few legal wins.
Indeed, the decentralised nature of cryptocurrencies challenges state regulation. Even so, the only way forward is to provide safety for those engaging with this market. Cryptos are no longer a funny way to buy pizza. They can threaten global financial stability if left unchecked.
