If we go with the last six months, the crypto economy experienced many milestones. A record surge in digital assets has taken place. If we consider some of the major highlights these are,
Lawmakers from Washington DC and around the world are in the process of figuring out how to establish laws and guidelines for making cryptocurrency safer for investors. At the same time, they are also in a process of making crypto less appealing to cybercriminals.
On the other hand, China has reaffirmed its effort to crack down on cryptocurrency. China is taking the help of crypto mining regulations. Apart from this, the US senators have considered new regulations to bolster cryptocurrency tax reporting measures.
Jeffrey Wang, (head of the Americas at Amber Group, a Canada-based crypto finance firm) said “Regulation is probably one of the biggest overhangs in the crypto industry globally,”. “We would very much welcome clear regulation.” Wang further added, “There are different agencies that may or may not have jurisdiction to oversee everything, and it differs state by state.”
Even Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen have shown their agencies' curiosity in regulation. Moreover, Gary Gensler (chairman of Security and Exchange Commission) has given comments about his agency as well as about Commodity Futures Trading Commission’s role in policing the industry. Apart from this, the IRS has shown sound interest in making sure that investors know how to report cryptocurrency while filing taxes.
According to Wang, these clear regulations are an indication that significant roadblocks forcryptocurrencies will be removed.
What do new regulations mean?
President Biden has appointed Gary Gensler as the chairman of the Securities and Exchange Commission. This commences the new era of cryptocurrencies and financial technologies.
If we go within the U.S federal government, the regulatory focus for crypto is administrative as well at the agency level. This include
This gives the power to each regulator to have its stance on the regulation or deregulation of cryptocurrency. Apart from this various classifications of cryptocurrencies by the regulators further creates confusion.
You can get more idea from the fact that the SEC oversees the digital assets that are considered securities. CFTC is going on its way and treats virtual currency as a commodity. If we further go with the IRS they treat it as property.
In addition to this, the division between the pro cryptocurrencies state and states with higher regulations adds more layers to this mess. This creates a problem for companies dealing with virtual currency.
But recently approved legislation can make it easy for the IRS to find tax evasion cases regarding crypto. Although investors keep records of both capital gains as well as crypto assets, new rules will make things easier for investors.
Cryptocurrencies are independent of centralized banking. They are neither subject to their regulations nor the problem that ensues from their deregulation. Cryptocurrencies offer attractive alternatives to various shortcomings of the existing financial system that we use. This is so because they are enabled by blockchain technology, a public ledger of past valid transactions. So it can be traded safely and securely. Moreover, there are no expensive transaction fees. So it will be right to say that it holds a bright future.