Yet again, the topic of self-regulation within the cryptocurrency realm has been brought to life. Amid government regulators across jurisdictions across the globe tightening the pressure on local crypto industries, self-regulated organizations (SROs) have been popping here and there. Major platforms announced their own SROs, aiming to standardize cryptocurrency exchange practices and compliance policies.
Albeit Financial Action Task Force (FATF) announcing its focus on preventing money laundering and heightening regulation on digital currencies, such actions can have a negative impact on current cryptocurrency stakeholders. Experts warn laws can see both brain drain and capital flight from such measure adopters.
“I would say 2019 is the year in which there’s a growing recognition that regulators and policy makers need to do more than just be aware of these, but may need to look at some policy responses.”
He believes regulators will involve more into the cryptocurrency sector this year because of “a combination of Libra and the prospects for central bank digital currencies.”
He suggested it’s time to consider the wide use of the digital dollar.
“I think the dollar’s status as the world’s primary reserve currency should be enhanced with a digital component and done in a way that doesn’t have to disintermediate the traditional banking system but can be done so traditional finance financial intermediaries can play a role in a digital component to the dollar.”
Two years ago before the crypto hysteria, China was the only country to have banned digital currency trading and initial coin offerings (ICOs). Not until the beginning of 2018, the world started seeing more governments’ involvement into the crypto space.
Early 2018 marked the emerging of self-regulating bodies in Japan and South Korea, thus becoming the first jurisdictions to have own cryptocurrency SRO, such as the Japanese Virtual Currency Exchange Association (JVCEA), formed back in April 2018.
The JVCEA was the answer of the Coincheck hack in January 2018, which resulted in theft of more than $530 million in NEM (XEM) tokens. JVCEA focuses on the crypto trading market in Japan, working along with the country’s Financial Services Agency to enforce compliance among the involved parties.
SELF-REGULATION IN THE U.S. AND THE U.K.
Not long after Japan and South Korea, the United Kingdom jumped on the self-regulation bandwagon, presenting CryptoUK – the first ever cryptocurrencies trade body. CryptoUK influenced lobby members of the Parliament to create laws for the local cryptocurrency market.
The US crypto market came up with the CRC – an independent body established by exchanges such as Bittrex, Kraken and Coinbase. The Crypto Rating Council emerged in the end of September 2019, providing insight on whether crypto tokens can be classified as securities.
RIPPLE ASKING FOR CRYPTO REGULATIONS
Earlier this year, Ripple sent an open letter to the U.S. Congress requesting fair crypto regulations. The blockchain startup spurred agencies to refuse voting laws that put the US crypto-based businesses at a disadvantage.
“Without regulatory clarity, we risk pushing the innovation, tax revenue and jobs that these new technologies create overseas.”