Crypto currency has been an extremely volatile market over the past year, with many exchanges and wallets created to attempt to match the influx of demand that has been extremely apparent in the crypto sector through the increased market prices of Bitcoin and other alt coins. With increased demand, however, there is increased scrutiny by state departments looking to regulate the markets in order to create some sort of stability and protection for both consumers and businesses who deal in cryptocurrencies. What will these regulations mean for the industry?
Japan has been on the forefront of regulating the crypto-market and from April 1st of this year, they have introduced a framework that will allow Bitcoin to be accepted as legal tender throughout the country. This regulatory framework has led to widespread adoption of the currency. In many countries, however, there is a big divide in government about whether or not to regulate crypto currencies as a commodity or treat it as legal tender, with many governments at this time in Bitcoin history taking an unknown stance on the matter. This inability to decide is wreaking havoc with the industries as they are not sure of the tax implications in years to come, leaving a gloomy fog of uncertainty in the minds of businesses and consumers alike.
In other parts of the world, cryptocurrency regulation has caused a huge uproar in the markets, with China, one of the biggest markets for crypto currencies in the world, taking a negative stance on ICOs and crypto currency players within their country. This uncertainty has created chaos with the value of crypto currencies as no one is sure of the repercussions it may result in for companies and holders of the currency. In July 2017, Washington passed the Senate Bill 5031, requiring exchanges to obtain a license from the Washington State Department to conduct crypto currency trading within the state, following audits of their data systems. This regulation led to controversy between the various exchanges, with Bitfinex and Poloniex stopping support for their customers in the area; while Gemini, a New York based crypto-exchange, decided that this move was a good one for the current climate and jumped aboard the legalisation of the markets.
With each negative stance taken on the markets, we are seeing more and more uncertainty which has stifled innovation in the crypto-sphere, but with a more positive regulation in place, the uncertainty dissipates. The rapid adoption of crypto currencies in the world makes negative regulation an extremely counter-intuitive force as it will lead to new avenues for devious behaviour but with the right regulations in place, more trust in the markets will mean greater crypto-adoption and faster innovation in the crypto-space. At this time, it is recommended to err on the side of caution when dealing in crypto currencies and keep up-to-date with the current regulatory trends.