One of the main factors that are affecting the prices of cryptocurrencies is regulation. There has been a trend where the prices of crypto coins start falling when the government cracks the whip in terms of regulation. Different countries have taken different stands in the regulation of cryptocurrencies.
In the last quarter of 2019, the Chinese intensified the crackdown on Bitcoin mining and the general cryptocurrency world and this led to a sharp fall in Bitcoin prices. In nature, cryptocurrencies are designed as freewheelers, which are not to be controlled by any specific country or bank.
Lack of regulation is what raised major concerns for some experts who find it hard to define this type of investment. To this end, there have been some serious concerns raised by policymakers about the regulation of cryptocurrencies.
Setting Regulation Standards for Cryptocurrencies
The issue of regulating cryptocurrencies has drawn mixed reactions across the globe. There has been a lot of confusion as to who should actually regulate cryptocurrencies. For instance, former U.S President Donald Trump, in the update of the tax reform law, asked the Commodity Futures Trading Commission to treat cryptocurrencies as a commodity. However, the IRS considers it is property, which makes its regulation even more complicated. The classification of Bitcoin was meant to solve the problem of regulation, but it does not seem to serve the purpose.
For taxation purposes, one cannot be able to compute the tax liability on cryptocurrencies without using the software. According to the CEO of Node40, Perry Woodin, there are a lot of complexities in keeping track of cryptocurrency transactions. You will need to have an in-depth understanding of the blockchain ledger and how it works. Unlike other transactions where you can have them entered into an Excel sheet, cryptocurrencies are sophisticated. Even more confusing is the fact that the state and federal governments have different responses and approaches to cryptocurrencies.
Can Cryptocurrencies Be Regulated?
Unlike conventional currencies, cryptocurrencies are unique in that they are portable and not confined to one area. This presents a huge challenge for the regulators. In addition, there are different coins that are traded on various exchanges like Big Money Rush. Some coins have utility tokens, which have a different purpose altogether. A good example is Augur, which is a utility token that runs on the Ethereum blockchain network. This is a type of token that is not subject to the disclosure rules provided by the SEC.
Coincidentally, there are so many cryptocurrency tokens that have declared themselves to be utility tokens. As such, they are not to be checked and this has become even harder for regulators and policymakers. This trend has seen quite a number of tokens being listed on various exchanges, away from their native countries. For example, there are many coins whose origin is China. However, since cryptocurrency trading is banned in the country, they operate in neighboring regions. In essence, regulating the cryptocurrency world is a tall order.
How to Deal with Cryptocurrency Regulation Challenges
Number of experts and analysts say that there is so much that needs to be done in terms of defining and classifying cryptocurrencies. At present it is not clear if Bitcoin is a digital asset or a commodity. Some experts suggest that cryptocurrencies should be treated in the same manner as public-listed stocks. This means that the existing regulations should be applied in a bid to control the cryptocurrency market.
Some Asian countries have started putting policies in place that will make it easier to regulate cryptocurrencies. For instance, in South Korea, any crypto profits of more than 2.5 million won are set to attract a 20% tax levy. Japan has also put a Virtual Currency Act into effect, which defines cryptocurrencies as assets.
We can only wait and see how the regulation of cryptocurrencies will turn out in the future.
The post Cryptocurrency Regulation and Controls appeared first on InsightsSuccess.