International Regulatory Cooperation Sends Positive Signals to Cryptocurrency MarketsDate Written: September 17 2018 Written By: Samantha Joule Fow
Without a doubt, cryptocurrency and the blockchain technology that underlies it is one of the greatest inventions we’ve seen so far in the twenty-first century. However, as a financial technology, cryptocurrency has yet to be adopted by the mainstream. And among the most prominent challenges facing the mainstream adoption of cryptocurrency is the fact that the market is still under-regulated.
Under-regulation is an issue unique to the open-source technology that gave rise to democratized currency, and it’s something that industry players are starting to take very seriously.
Market Conditions Merit Cryptocurrency Regulation
Bitcoin and other cryptocurrencies are not going to be trusted as reliable new systems for generating and distributing wealth until we better understand the unique ways that cybercriminals leverage these technologies to their advantage.
In fact, a new study indicates that cryptocurrency – and particularly privacy coins like Dash and Monero that consider user privacy a high priority – is an effective tool for money laundering because it allows cybercriminals to turn dirty cash into less traceable electronic assets.
A tendency toward white-collar crime isn’t the only criminal issue in the crypto world. There’s also outright theft, kidnapping for ransom, and innumerable other ways the criminally-minded individuals can use this incredibly technology to their advantage.
All in all, the cryptocurrency markets are ripe for regulation. Now, the international cryptocurrency community is coming together to stop crypto-related financial crime before it even starts.
International Cryptocurrency Regulation
When it comes to financial crimes, cryptocurrency can be used just as easily – if not more easily – as any bank account. But bank accounts are highly regulated, while cryptocurrency is not. To address this loophole, the Joint Chiefs of Global Tax Enforcement, also known as the “J5” is combatting transnational tax crime and money laundering through international collaboration. The J5 is a collaboration between agencies of the United States, United Kingdom, Netherlands, Canada, and Australia, and the it collaboratively investigates cases of evasion and money laundering. The J5 also strategies that can aid in the collective effort to police the internet and to educate the public about existing risks.
The J5 is not messing around when it comes to ensuring tax compliance and preventing money laundering. It intends to treat Bitcoin like any other form of property, requiring any losses or gains on the blockchain to be reported for taxation purposes. This kind of oversight and regulation could have huge repercussions for the overall cryptocurrency landscape, and some are seeing it as the beginning of the end of true decentralization. However, while regulatory oversight is a scary thought for some, it’s a welcome sign of progress for others who would like to see this new technology take center stage in the modern era.
Advocating regulation is one of those things that will catch you a few side-eyed glances around the office, but it’s a critical part of a well-functioning economy. Effective regulation curbs price stabilization and the risk of fraud, both of which are major issues in the current cryptocurrency markets. And overall, regulation may prove key to building public trust in this new technology.