The cryptocurrency market is growing under siege by regulators and financial institutions in various countries around the world. Many regulators have their opinions on this asset class as they consider it quite dangerous to the economic stability of countries, and while they don’t say so directly, one of the main goals is to ban or restrict it so that it doesn’t cause major problems. .
This situation is experienced all over the world. For example, the British Financial Conduct Authority recently said that rules for cryptocurrencies were needed. The fact is that these rules cannot be local, but global. This states that the goal of global regulation is to control the use of cryptocurrencies and the market in general as the issue of cryptocurrency-related companies, such as Binance and other digital asset exchanges, has been addressed.
It seems that the main goal of these regulators is to “keep the market clean” by stopping any type of asset or economic activity that endangers investors, as well as financial stability. For example, cryptocurrencies have long been in a regulatory gray area and this needs to stop as these loopholes lead to large numbers of people using cryptocurrencies for illegal activities.
Global regulation is the solution
This is not the first time global regulation of cryptocurrencies has been mentioned. This topic has been discussed countless times by regulators around the world. The idea of global regulation, at least from this point of view, could eliminate several problems in the market because if all countries set identical regulatory standards, there is no room for crime.
The fact is that developing such a scheme is not easy. Looking at the case of cryptocurrency companies that are not regulated, there are tons of cryptocurrency companies in the world. And an important point to consider is that many countries have not cared too much about putting in place real controls to combat criminal activities such as money laundering. While some countries are looking for alternatives to regulate cryptocurrencies, others, such as El Salvador, have even approved them as legal tender.
But it’s not just about rules as strict as China’s. In the case of the British Treasury Commission, it closely examined the risks of cryptocurrencies, but also the opportunities associated with this type of asset. This approach took into account social inclusion, the need for regulatory change and the imminent need to advance technological issues on the economy.
While the ability to replace fiat currencies with decentralized cryptocurrencies is not the main topic, or whether they work together legally as in El Salvador, some revisions have been requested. It will consider the pros and cons of this process to determine the next regulatory step.
And while the possibility of developing central bank money was not discussed directly, it is a topic that has certainly been raised quietly. Projects of this kind are starting to develop in different parts of the world, with some analysts arguing that central bank cryptocurrencies are the future of the economy.
Protection is needed
Cryptocurrencies are highly fluctuating assets, which is why it is necessary to protect against crashes. Looking at the position of the Financial Conduct Authority, we realize that last year they failed to let Binance, the world’s leading cryptocurrency exchange, operate normally because such platforms are not regulated by the regulations. But now, almost a year later, Spain, France and Italy have allowed Binance to operate, which could be a positive move for the market.
It is clear that governments need to protect the traditional economic fabric and it is hoped that user safety will also be preserved. But today, with the most recent market crash, looking for regulations to keep users safe is becoming increasingly important.
It is impossible to deny that there are certain risks associated with cryptocurrencies, but it cannot be denied that they have certain advantages. For now, the challenge for regulators is to strike a balance between allowing the use of cryptocurrencies and protecting economic stability. This is why very few countries have made regulatory progress, as regulating these types of assets is harder than it looks.
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