Cryptocurrency Regulation in 2018: The Situation is Heating Up
The Ubcoin Market team prepared an analysis of cruptocurrency state regulation strategies in 2018. We take a look at welcoming, prohibitive and undecided strategies and make some assumptions what can happen next.
Since 2017 turned out to be the year of cryptocurrency and ICOs, 2018 is predicted to become the year of governmental regulation. The Bitcoin fever forced states to boost regulatory development in order to take control over operations on cryptocurrency (CC) markets. Some countries have been treating new technologies such as cryptocurrency as a driver for economic growth and innovations. However, other countries either ban cryptocurrencies or hesitate to make decisions for or against cryptocurrencies.
Why regulate cryptocurrencies?
Bitcoin was created free from governmental regulation. It was purely mathematical, decentralized and independent. Based on peer-to-peer technology and being recorded in blockchain, it didn’t need any central administrator or state support. Bitcoin appeared in 2009 and went unnoticed by governments for several years. However, Bitcoin started becoming more valuable and prominent in 2013. Since 2013 Bitcoin has mostly been on an upward trend in value and popularity. Bitcoin’s rise along with other blockchain cryptocurrencies has created a legislative upset in many governments. Today the situation is heating up as never before.
By regulating cryptocurrencies governments want to:
- Take control over financial operations;
- Fight the illegal activities such as money laundering, capital flight, illicit goods turnover, tax evasion, sponsorship of terrorism etc.;
- Counter threats to national fiat currency;
- Earn from taxing cryptocurrencies and its market operations.
There is no universal law for its regulation, mostly because cryptocurrencies seem unusual for traditional legal systems. Problems have appeared from the very beginning regarding legislation and digital currency. For example, digital money does not even have a common definition in many legislative systems. The legal status of cryptocurrency differs from one jurisdiction to another, treating it as a means of payment, asset or money substitute. It leads to multiple regulatory strategies, many quite experimental in nature.
Overview of regulatory regimes
Some governments treat cryptocurrencies as a legitimate currency, issuing national virtual currency, fully legalizing ICOs and smart contracts, and encouraging the overall push for developing blockchain-based projects.
At the moment Switzerland shows itself as a real crypto-nation where cryptocurrencies are already integrated into the legally recognized economy. The canton of Zug supports blockchain-based projects, banks are working with both CCs and fiat money. There are multiple companies connected with virtual currency in the city. Additionally, there is a university that offers training for blockchain specialists. All of this is happening while the legal status of cryptocurrencies is not yet fixed here.
In February 2018, Germany made a step towards CC and claimed it considers Bitcoin and other virtual currencies equal to the legal means of payment.
Recently another country has become the center of attention in the CC-world. Venezuela issued its national virtual currency petro to cope with a ruthless economic crisis. Introduced by President Nicolás Maduro, it is claimed to be backed by the country’s oil, gold and mineral reserves. While Venezuela’s National Assembly declared it to be an illegal debt issuance, Maduro believes petro will complement the country’s sharply fallen bolívar fuerte and help mitigate the effects of the U.S. sanctions.
Another site for testing new technologies appeared in Eastern Europe in 2017. In December Belarus legalized blockchain and cryptocurrencies in the country, signing the “revolutionary” decree “On the Development of Digital Economy”. According to the document, legal entities will be able to issue tokens, invest in ICOs, sell and purchase virtual money through crypto exchanges and markets. Furthermore,cryptocurrency activity won’t be taxed until 2023.
While some countries encourage blockchain and cryptocurrency projects, others ban them and treat enthusiasts as criminals. Unfortunately, more and more states are amplifying negative pressure against cryptocurrency.
For instance, China once known as the home to the largest bitcoin trading community, has been taking multiple actions to repress CC activity. It banned ICOs, ordered bank accounts associated with exchanges to be frozen, expelled CC miners, and banned internet and mobile access to everything related to CC-trading.
Nepal banned cryptocurrencies long ago and already managed to imprison dozens of blockchain enthusiasts. Other countries that have banned CC are Bangladesh, Ecuador, Kyrgyzstan and Bolivia.
Once viewed as a thriving, friendly environment for cryptocurrencies, Indiahas began cracking down on CC in 2018. The reasons for such actions are similar to other countries’ reasons. Various authorities consider CCs to be connected with money laundering, financing of terrorism, tax evasion and other illicit activity.
Even countries which choose wait-and-see strategies are going to have to make some regulatory decisions this year. Recently the U.S. Securities and Exchange Commission has launched a cryptocurrency probe to take closer look at ICOs. The probe is supposed to strengthen the pressure on the rich U.S. CC market, following the series of warning measures from U.S. securities regulator suggesting that tokens and ICOs violate security laws.
Officials of South Korea, a country still famous for its strong cryptocurrency presence, demonstrated discord concerning regulation. While warnings about a possible ban of domestic virtual currency exchanges are exaggerated, the government has started placing restrictions disallowing anonymous accounts from trading cryptocurrencies.
The analysis of current events globally suggests that all states are moving towards regulation, and 2018 will be a busy year in this regard. States will either introduce taxes or eliminate anonymity, or restrict investment rules, or influence mining. Whatever steps are taken, the CC world will never be as independent as it was before. We have created UbcoinMarket for this exact reason! Ubcoin Market is a smart ecosystem for easily investing, selling and buying goods with cryptocurrency in a secure and legal manner.
Ubcoin Market removes the need to buy cryptocurrency for fiat money, Ubcoin Market provides a platform where virtual currency can be obtained by selling goods and then exchanged for other products. The system cuts out all the possible intermediaries and facilitates smart contract execution between independent parties. The platform also helps eliminating possible risks by developing and utilizing AI technology to pre-screen sellers’ postings.
The Ubcoin Market enables people to easily buy or sell goods using cryptocurrency in a simple, secure and fast manner.