Initial Coin Offering on blockchain platforms has painted the world red for tech-startups across the world. A decentralised network that can allocate tokens to the users supporting an idea with money is both revolutionizing and awarding.
Profit-spinning Bitcoin turned out to be an ‘asset’ for early investors giving manifold returns in the year 2017. Investors and Cryptocurrency exchanges across the world capitalized on the opportunity spelling enormous returns for themselves leading to ascent of multiple online exchanges. Other cryptocurrencies such as Ethereum, Ripple and other ICOs promised even better results. (Ethereum grew by more than 88 times in 2017!)
While the ICOs landed millions of dollars in the hands of startups within a matter of days, ruling governments initially chose to keep an eye on the fastest fintech development ever that had the potential to raise millions of dollars within a very short period of time.
Countries all across the globe are mulling over to regulate cryptocurrencies
But the regulators turned cautious as the technology and its underlying effects gained popularity as ICOs started mulling funds worth billions of dollarsâ-âthat too on proposed plans written on whitepapers.
It was in late 2017 that the governments across the world seized the opportunity to intervene. While China banned cryptocurrencies altogether, the SEC (Securities and Exchange Commission) in the US, highlighted risks posed to vulnerable investors and has proposed to treat them as securities.
A recent warning statement from SEC Chairman Jay Clayton released in December cautioned investors mentioning,
“Please also recognize that these markets span national borders and that significant trading may occur on systems and platforms outside the United States. Your invested funds may quickly travel overseas without your knowledge. As a result, risks can be amplified, including the risk that market regulators, such as the SEC, may not be able to effectively pursue bad actors or recover funds.”
This was followed by India’s concerns, wherein the Finance Minister Arun Jaitley in February said that India does not recognize cryptocurrencies.
A circular sent by Central Bank of India to other banks on April 6, 2018 asked the banks to sever ties with companies and exchanges involved in trading or transacting in cryptocurrencies.
In Britain, the FCA (Financial Conduct Authority) in March announced that bitcoin blackjack it has formed a cryptocurrency task force and would take assistance from Bank of England to regulate the cryptocurrency sector.
Different laws, tax structures across nations
Cryptocurrencies majorly are coins or tokens launched on a cryptographic network and can be traded globally. While cryptocurrencies have more or less the same value across the globe, countries with different laws and regulations can render differential returns for investors who might be citizens of different countries.
Different laws for investors from different countries would make calculation of returns a tiring and cumbersome exercise.
This would involve investment of time, resources and strategies causing unnecessary elongation of processes.
Instead of many countries framing different laws for global cryptocurrencies, there should be constitution of a uniform global regulatory authority with laws that apply across the borders. Such a move would play an important part in enhancing legal cryptocurrency trades across the world.
Organizations with global objective such as the UNO (United Nations Organisation), World Trade Organisation (WTO), World Economic Forum (WEF), International Trade Organisation (ITO) have already been playing an important part in uniting the world on different fronts.
Cryptocurrencies were formed with the basic idea of transference of funds all across the world. They have more or less similar value across exchanges, except for negligible arbitrage.
A global regulatory authority to regulate cryptocurrencies across the world is the need of the hour and might lay down global rules for regulating the newest mode of financing ideas. Right now, every country is trying to regulate virtual currencies through legislations, drafting of which are under process.
If the economic super powers with other countries can build a consensus introducing a regulatory authority with laws that know no national boundaries, then this would be one of the biggest breakthroughs towards designing a crypto-friendly world and boost use of one of the most transparent fintech system everâ-âthe blockchain.
A universal regulation consisting of subparts related to cryptocurrency trading, returns, taxes, penalties, KYC procedures, laws related to exchanges and punishments for illegal hacks can yield us with the following advantages.