What cryptocurrency regulations might we see in the near future?
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Cryptocurrency being a global trend, Its usage has far-reaching implications on any country and its financial, trade, banking, security, and political ecosystem. Every technology has its maturity and stability period. It takes an organic way to get effectively embedded in society. The regulations will evolve with the technologies. Initially, the regulations will focus on arresting the negative implications. Over time regulations will evolve to encourage positive implications. In short term, the regulations are required to address immediate dangers and misuse.
Regulations will be brought in different time phases - first addressing the negative impacts.
Tax to arrest loss of revenues to the exchequer by bringing cryptocurrencies transactions in tax definitions.
Anonymous transactions, parallel economy
Money laundering.
Cryptocurrency-as-assets, how to monetize and trade.
Monitoring the trading temperature.
Safeguarding the gullible infant traders.
Illegal trades
It will be very fascinating to see the positive implications, and how regulations will be shaped by those factors. Certainly, every technology has good as well as evil usage. Cryptocurrency technology will self-develop to address these aspects. We will see regulations in the future to promote and facilitate legitimate use.
Regulation of cryptocurrency is a standard issue in any country. Very few countries have accepted cryptocurrency as a standard. In the future, if any nation, especially India, chooses to regulate cryptocurrency properly, the regulations shall be in and around the following areas:
1. Taxation
2. Security
3. Governance
4. Privacy
5. State access to information for national security
Cryptocurrency regulation will take a number of forms: first of all a legal definition of what a cryptocurrency actually is. Since there are a myriad ways in which these currencies can be minted - mostly in a variety of techniques, many of whom may require more or lesser amounts of 'effort' to generate value.
More often than not, the definition of these techniques and their standardisation are left to the likes of IEEE, ISO or CEN/CENELEC. While crypto has its origins in tech, its impact on value exchange sees the regulation of the currency come out of the OECD or the World Bank. But it may also come from an unexpected place like UNESCO.
These secondary regulations / legislations are likely to be developed:
1. Storage
2. Transmission
3. Exchange
4. Consumer rights
Much of the current technical work is aimed at circumventing centrally regulated elements of the financial system and in a way represents the return to being able to take cash out of your account and put it under the mattress.
Broader society has come to realise that a return to the cash economy would render many processes that generate revenue for the government unworkable. And that in turn would have detrimental flow-on effects on public infrastructure.
And a final note should consider the environmentally unsustainable methods of value creation and value exchange. Indirectly, this may well be the first place where regulation and legislation catches up with crypto.
Regulations would be around the following:
a. Bringing transparency to find out who owns the crypto. This would be to eliminate money laundering and terrorism especially cyber terrorism
b. As we know central banks manage money supply to keep including many things under control. So regulation would be around how to manage availability of crypto currency
c. Generation of new cryptos would come under a regulatory process so that additions can be regulated
I think governments around the world might become more open to the adoption of cryptocurrencies. This will allow them to better regulate the crypto market in terms of tax regulations and AML for example. Stablecoins might also become more favored by the governments which could be subject to audits ensuring their assets and holdings. More and more regulations might come to prevent market manipulation, which is a big loophole now as some large whales can really swing the entire value of a cryptocurrency.