There has been a means of trading goods and services ever since the Mesopotamian shekel, which was the first known money to be produced 5,000 years ago. People are so obsessed with money that our entire existence revolves around its production and exchange. A new currency invaded the financial framework in 2008. A document named “Bitcoin: A Peer-to-Peer Electronic Cash System”, published by the controversial and mysterious Satoshi Nakamoto served as the foundation for this advancement in the monetary system. If you are into Bitcoin investment, you may also want to know about The News Spy Technology.
Ever since more than 2,000 digital currencies have appeared on the market. Despite falling to 1.3 trillion dollars lately and being unstable, the value of these decentralized currencies exceeded 3 trillion dollars in 2021. In addition to being an unpredictable medium of exchange, others have called the cryptocurrency security environment “the wild west.” The question is whether cryptocurrencies can be controlled by employing the same standards as the centralized financial systems that are already in place to safeguard and manage risks.
Why Do We Need Decentralised Currencies?
Cryptocurrency was created to address important issues with trust in electronic payments. The Nakamoto system is built around “cryptographic proof,” which does away with the necessity for centralized financial institutions. With the use of this decentralized system, any person may effectively serve as their own “bank.”
But apart from that, the use of cryptocurrencies for fraud and cybercrime is on the rise, according to Europol research. Cryptocurrency is an ideal medium for a wide range of frauds. For instance, the recent OneCoin Ponzi scam duped investors, who lost over 4 billion dollars in total. The proliferation of frauds like OneCoin is made possible by a lack of regulation over cryptocurrencies. Regulators are now starting to confront cryptocurrencies and the platforms known as decentralized crypto exchanges (DeFi), which are used to handle crypto transactions.
Keeping Uncontrollable Under Control
There are currently few or no regulatory restrictions on cryptocurrencies. However, the Executive Order on cryptocurrencies seeks to mandate regulation of digital currencies as well as exchanges by the Securities and Exchange Commission (SEC), FinCEN5, Federal Reserve Board, and Commodity Futures Trading Commission (CFTC). To reduce investor risk, the SEC also plans to register and oversee cryptocurrency exchanges and concentrate on asset storage.
In other regions of the world as well, cryptocurrency-related regulations are beginning to emerge. Brazilian authorities are establishing a “regulatory sandbox” and have over 10 million cryptocurrency investors. To monitor transactions, get visibility, and gain insights into the governance, regulators are taxing cryptocurrency platforms and claiming that bitcoin is an asset. Brazilian Securities and Exchange Commission permission is required for cryptocurrency exchange platforms.
A crypto regulatory framework has been introduced to the roadmap of the Dubai Financial Services Authority (DFSA). The financial industry and the larger investing community are being consulted by the DFSA on the kind of regulatory framework that would be appropriate for the market’s relevant crypto tokens.
The Difficulties In Controlling Cryptocurrency
Over 80 organizations are involved in the World Economic Forum’s (WEF) Digital Currency Governance Consortium, which is producing international rules and guidelines for the cryptocurrency industry. Regulation goals are a crucial component of the consortium’s activity. In addition, 91 countries have released or are researching central bank digital currencies (CBDC). These are cryptocurrencies backed by a big, state-sponsored bank. Cryptocurrencies are expected to be subject to the same rules and laws as centralized currencies as a result of plans to legalize them by establishing CBDCs.
It is doubtful that cryptocurrency would vanish from the map of currencies. But because of their decentralized structure and the difficulty of regulating them, cryptocurrencies as well as exchanges are not going to be easy to do. The development of regulatory frameworks is a global effort to gain control.
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