Is Cryptocurrency Regulation a Good Thing?

Apart from skyrocketing prices, one of the biggest reasons for the popularity of some cryptocurrencies is its decentralized nature. In layman’s terms, no single entity or corporation has full control over it, allowing owners to be in full control of their assets. While this is not true for all cryptocurrencies, the likes of Bitcoin and Ethereum are entirely transparent and credible, with all transactions recorded on the blockchain.

With the recent China and South Korea crackdowns on exchanges and cryptocurrency-related assets, the issue of regulation has been at the forefront of many people’s minds. Understandably, there is a fear that anonymity will be compromised if regulation becomes the norm, but is it all doom and gloom?

Is cryptocurrency regulation inevitable? Image from coinvedi.com

Is cryptocurrency regulation inevitable? Image from coinvedi.com

There has been plenty of fear, uncertainty and doubt (FUD) going around regarding regulation in China, but is the world’s most populous nation really against cryptocurrency? To date, the country has banned initial coin offerings (ICOs), issued notices against Bitcoin miners due to excessive energy consumption, and ordered local exchanges to cease trading cryptocurrencies. Its primary concern is the use of cryptocurrencies to siphon funds out of the country, as well as being an avenue for money laundering and other criminal activities.

But as a whole, China is not inherently opposed to the idea of cryptocurrencies and the blockchain. According to a report by the South China Morning Post, the country’s central bank researches the possibility of its own digital currency, mirroring ongoing studies in Russia.

“What the central bank has in mind is a centralized digital currency among all,” said Yao Qian, the research lead at the People’s Bank of China, speaking to SCMP.

Similarly, efforts in South Korea have seen a public backlash, with over 200,000 signing a petition against the regulation of Bitcoin. As of now, there has not been an official response from the government, but it is expected to push ahead with several restrictions. This includes not allowing bank accounts to make deposits into exchanges, unless the registered name matches both accounts, as well as imposing a tax of 24.2% on South Korean cryptocurrency exchanges reported Yonhap.

South Korea's move to regulate cryptocurrencies generated huge backlash. Image from btcmanager.com

South Korea’s move to regulate cryptocurrencies generated huge backlash. Image from btcmanager.com

Although the camps for and against government regulation have been firmly established, if cryptocurrencies are to become a truly viable, convenient form of payment, both parties must work together to determine a suitable middle ground. Regulation will ensure that there will be no manipulation of the system and that any discrepancies or irregularities can be traced back immediately. Theoretically, it should also curb illegal activities although it remains to be seen how digital criminals will adapt and shift operations to bypass potential regulations implemented.

It is widely anticipated that significant regulations will be put in place for cryptocurrencies this year in several countries around the world. This should help to weed out scams and Ponzi schemes. However, what happens to global cryptocurrency exchanges is anyone’s guess, and will certainly have a significant bearing on prices this year.

While it is likely that the most popular cryptocurrencies are here to stay, it is not inconceivable that country-specific cryptocurrencies will be launched by governments once they have figured out the logistics required. In fact, centralized networks such as Ripple already provide a case study for the potential success of similar tokens. It is now up to the authorities and other regulatory bodies to convince the public that their alternatives to decentralized cryptocurrencies are worth adopting.

Everus is fully committed to abiding by any laws or regulations put in place by Bank Negara Malaysia to regulate and prevent the misuse of cryptocurrency for money laundering and terrorist financing, and has been recognized as a reporting institution.

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Cover image from techinasia.com
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