July 19
DeFi 101

Crypto Regulations: State of the Industry and What’s To Come

Crypto Regulations: What's to come

4 min read

Cryptocurrencies have come a long way since Bitcoin in 2009. Today, crypto’s popularity is vast across different countries on the globe, with many early adopters looking for ways to get on the train. However, in the face of growing adoption what does the regulatory landscape look like for crypto around the world?

From being a minor sector the majority were skeptical about, to receiving attention from major institutions like Paypal, GoldmanSachs, Cashapp, and others, the crypto industry has shown strong resilience over the years. The massive growth in crypto’s institutional adoption this year has “in your face haters!” written all over it. Crypto ain’t going nowhere, on the contrary, it only gets better and better.

On another hand, several countries have also begun or are already on the path to crypto adoption. El Salvador recently became the first country to announce its adoption of Bitcoin as a legal tender. A major boost for the crypto industry and perhaps the beginning of a new wave of mainstream adoption.

<text-h2> The Regulatory Landscape <text-h2>

While these advancements are quite laudable, the crypto industry globally is still largely unregulated despite the growing number of countries using crypto as of today. The regulatory landscape is still very mixed internationally, and has continued to remain a challenge for users in the industry.

Some countries like the US, Canada, the UK and the European Union have shown positive attitudes towards crypto with regulatory oversight guiding their activities. For instance, the UK Financial Conduct Authority (FCA) required all firms conducting crypto regulated activities to register with the authority as a means of complying with anti-money laundering (AML) regulations. The agency recently banned the activities of one of the largest crypto platforms, Binance in the country for failure to comply with its regulations.

Read more on implications of Binance ban

Countries like China, Russia, Bolivia and a host of others, on the other hand have shown tough resistance to crypto related activities. Some even go as far as outrightly banning them. The crackdown on crypto in China recently has been a major contributor to the plunge in crypto prices. The government recently ordered the shutdown of crypto mining in the Sichuan province in China. The government in a statement also ordered banks not to provide any form of support whether services or products related with cryptocurrency transactions.

Central banks around the world in a bid to establish regulatory frameworks are also increasingly looking at adopting Central Bank Digital Currencies (CBDCs). A form of digital currency representing a country’s fiat currency, controlled and regulated by the central bank.

Read more on CBDCs

<text-h2> What’s coming ahead? <text-h2>

Truth is, we should expect more regulations in the industry in the near future. One certain reason would be in order to curb the level of fraud and money laundering activities associated with crypto transactions. The real question here would be, how far would these regulations go to protect investors and users?

Regulations aren’t necessarily bad for the industry, as a matter of fact, they show that the governments indeed recognize the impact of the crypto industry and are taking it seriously. They also bring some form of stability and inspire confidence in users. But to what extent would the government seek to regulate or control the crypto industry?

Decentralization is one of the core offerings of crypto and is one of the major reasons amongst many others, it continues to grow in popularity. Several countries continue to watch and see how best to regulate crypto activities. However, a complete control by government authorities betrays the essence of crypto. Although such a goal appears almost impossible to practically enforce, fingers remain crossed to see how far government authorities are willing to go.

It’s a matter of balancing regulatory protection, practicality among mainstream usage and upkeeping the ethos of decentralized value transfer.

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