The Challenge Of Regulating Cryptocurrency
By Sana Uqaili on ALTCOIN MAGAZINE
It has been difficult for crypto-enthusiasts to do proper research while trading cryptocurrencies, as the market is highly speculative and full of an amalgam of authentic and scam news, both of which have been spreading virally across the Internet.
To add to that, the recent crashes in bitcoin prices and the sudden boost after blockchain was embraced by the Chinese President have raised the confusion even further for cryptocurrency traders as well as regulators worldwide.
What Cryptocurrency Seeks To Provide
At the core of the cryptocurrency revolution, or more so as it is believed, is the goal to improve the security, trust, and privacy of transactions, by eliminating the intervention of third parties. However, by connecting users to each other directly, cryptocurrencies actually make regulatory supervision even more complex.
If you’re not too clear on how the system works, you can read a beginner’s guide on ‘the internet of value’.
The regulatory control pursued by most governments is generally related to illegal activity and money laundering. Although cryptocurrency originators may have had no motive to foster such acts, many of them nevertheless hope to escape from any or all forms of centralized and domineering regulatory controls.
Problems Being Faced By Libra
The latest offering to the tech world by the founder of Facebook, Mark Zuckerberg, is a proprietary cryptoasset called Libra, as most of you know already. Libra has been designed as a means of providing P2P payments through Facebook. Undoubtedly, it must have been expected for Libra to mimic bitcoin to a great extent.
When news about Libra initially came out into the crypto world, it no doubts spawned a lot of excitement. Tech giants signed agreements on financial partnerships and spread the news on how Libra could change the global financial systems. The 1.7 billion unbanked people among the global population particularly started looking forward to the evolution.
However, it did not take long before government agencies began giving their feedback on the matter, which led to the buzz cooling off. Lael Brainard, a governor in the United States Federal Reserve, recently stated explicitly that Libra cannot be launched until it meets several key regulatory standards. Other analysts have quoted even stronger statements about the risks of launching Libra and its subsequent potential dangers to the global economy.
As a result, many of the giant businesses in the financial sector have started deviating from the system. These include Visa, Mastercard, Paypal, and eBay, who swiftly retreated from the company. This is not all. Other businesses are also threatening to do the same, while international regulators continue to make guidelines for digital transactions more stringent than ever before. Perhaps, a major concern for these regulators is that Libra could potentially be sabotaged for terrorist financing or money laundering.
The Impact On Other Cryptoassets
These new guidelines may impact other cryptoassets as well; especially those that offer total anonymity in transactions via blockchains, such as Dash and Monero. Some platforms, such as DeepOnion, are moving underground to avoid any level of regulation at all. These platforms believe that privately-held transactions will never be allowed by governmental bodies.
As this gap gets broader and broader, some emerging coins seem to be making attempts to provide solutions that can accommodate the regulators to a certain extent. New platforms like Verge and Particl are being discovered that do offer some kind of regulatory supervision, while at the same time maintaining the desired privacy that cryptocurrency users cash on.
Particl, for instance, has its own internal regulation, which permits private transactions as well as user voting. Users are allowed to vote against records that do not abide by community standards, thus providing a middle road between total anonymity (as in Monero and Zcash) and complete regularity control.
Other platforms like Dash also seem to be coming up with solutions that do not completely go against the regulators. In Dash, the coins are assorted with other coins to give the desired privacy, in order to comply with the suggestions of FATF ( Financial Action Task Force).
The Hope For Mass Adoption Of Cryptocurrency
This is where we find hope for cryptocurrency to get the mass adoption it strives to achieve. Although the potential to escape from government intervention will always be there, but it seems like a certain level of compromise can be made from both sides, in order to create a hybrid option to shape the future of digital assets.
Even Facebook has committed to put in tireless efforts to cooperate with regulators, and bridge the gap that’s currently keeping Libra from seeing the light of the day.
Will the regulators and cryptophiles be able to unify in the near future?
Keep hunting for cryptocurrency news across the Internet, or follow the Cryptocurrency section on Opinined.
Originally published at https://opinined.com on October 27, 2019.
