Just one year after the inception of bitcoin in 2009, there were those who were already proclaiming that this new ‘digital currency’ was simply a tech novelty and it would soon meet certain death. (There is a website that tracks all of the ‘bitcoin obituaries’ in which prominent outlets have declared the currency a failure, as of this writing bitcoin has been declared ‘dead’ 251 times.)
Up until a few years ago, world governments had either dismissed or banned bitcoin on the basis that it has no real value, and/or is being used for illicit purposes. In 2013, the Chinese government placed a ban on bitcoin and barred all banks from being involved with it in any way. This was during a time when about 80% of the world’s bitcoin was being mined in China, and although China would later lift this ban, it has since attempted to re-ban bitcoin as well as cryptocurrency exchanges, and with ICO projects. As of early 2018, China is focusing on banning bitcoin mining and cracking down on ‘illegal’ mining.
From not being involved at all to a total ban, governments have been active with varying levels of regulation in this space, and this has come with varying levels of success, with certain countries saying more than others on how they plan to structure regulation. In recent weeks, there are a few countries that have been the cause of widespread panic regarding information surrounding regulations that would be imposed by the governments of these countries. To clear this up, let’s break down FACT from FUD to realize the true implications that these regulations will have, and what better place than straight out of the mouths of the regulators?
Initially sparked by an official announcement from the Korean government that cryptocurrency exchanges would be banned within the country, Korea has seen a fury of public activism surrounding regulations on cryptocurrency, and the government potentially halting all trading activity on exchanges. This initial announcement of a ban was then reversed into much more toned down rhetoric, with an eventual announcement that there are no plans to ban exchanges. The finance minister of Korea (Kim Dong-yeon) has even come out in favor of blockchain technology and crypto; during his recent visit to China for economic talks he stated: “For open-source blockchain networks, cryptocurrencies are necessary as incentives for individuals to participate in the network.” and has also stated that the government will take a cautious approach when it comes to regulating the markets, so as to not stifle innovation. The events of past weeks and months in Korea regarding crypto regulation have shown that although there may be bad actors in government who wish to create FUD and/or make a profit over a state of panic in the markets, the end result can be fair regulation in the form of a framework released by the Financial Services Commission outlining do’s and don’ts for banks and exchanges, and since this recent implementation, market sentiment has remained neutral to positive.
Often overlooked in the crypto space in favor of China, Japan, and S. Korea, India has rapidly become entangled in a hodgepodge of crypto regulations that have confused investors inside the country as to whether all Indian exchanges will be permanently closed, and if any real regulations will ever be implemented. Since 2013, India has been struggling with regulation in this space, refusing to even consider regulations, which may legitimize the exchanges, and instead opting for a ‘slow ban’. This process involves the government supposedly closing all of the trading platforms in India (of which there are 10), and somehow making users migrate their funds elsewhere. On the other hand, India’s finance minister has stated: “the government will take all measures to eliminate the use of these crypto assets in financing Illegitimate Activities or a part of the payment system. The Government will explore use of blockchain technology proactively…” This is a thinly veiled statement that India could take the same approach that has been seen in the USA, S. Korea, and Japan, while also announcing their own set of upcoming regulations set to be finished by March 2019, relating to consumer protection and illicit funds flowing into the market.
After all the dust has settled, it seems that regulators around the globe are beginning to understand the implications of blockchain and crypto, and despite all of the FUD and position changing, there are measures being implemented that will hopefully create a concise and efficient system of regulation that can be trusted in the years to come.
Any questions/comments/etc– @N_koi2001-twitter