Bitcoin operates without the need for a central authority or banks because it is based on peer-to-peer technology. The network manages transactions and issues bitcoins collectively. Bitcoin is an open-source project with a public design, no one owning or controlling it, and anybody can participate. Cryptocurrency provides fascinating uses that could not be covered by any previous payment method due to a number of its unique qualities.
Regulation is the way for the cryptocurrency to purge the industry of bad actors and engender trust, which in turn would help it grow and help safeguard the interest of its users. Every country and jurisdiction have their own stigma to manage the cryptocurrency, working and trying to devise strategies to minimize the risk and increase the credibility
Regulators also help temper cryptocurrency prices when they purge the market of illegal activities and thereby provide a safer environment for genuine investors. The certain regulations that have been put forth are:
COMMODITY EXCHANGE ACT (USA ): Under the commodity exchange act, the CFTC has complete control if any market manipulation happens in regard to the trading of the crypto assets that are considered in the category of commodities.
MONEY LAUNDERING DIRECTIVE (EUROPE): The European Union (EU) has taken a constructive and welcoming stance to blockchain technology in general, but it has only recently introduced official legislation to regulate it. The EU signed the 5th Anti-Money Laundering Directive (5AMLD) into law on January 10, 2020, bringing cryptocurrencies and crypto service providers under regulatory scrutiny for the first time.
SETTING FINANCIAL INTELLIGENCE UNITS (EUROPE): The law promotes transparency surrounding the owners of virtual currencies as part of an attempt to combat money laundering and terrorism funding. It suggests that EU member states construct central databases containing crypto users’ identities and custodial wallet addresses, which would be accessible to Financial Intelligence Units (FIUs) in order to minimize the risk.
FINANCIAL ACTION TASKFORCE(FRANCE): Though France does not have any tight regulation in terms of crypto trading but they have devised certain norms in order to maintain its rightful use. To combat anonymity of cryptocurrency transactions, it has proposed a new Ordinance is proposed with stricter AML and CFT norms, ensuring mandatory compliance with standards of the Financial Action Task Force (FATF)
AML LAW(AUSTRALIA): The Australian government changed its anti-money laundering and counter-terrorism legislation in 2017 to compel digital currency exchanges to register with the Australian Transaction Reports and Analysis Centre. They must also put in place the required anti-money laundering and anti-terrorist financing (AML/CFT) controls to reduce the risk of money laundering and to identify and authenticate their customers’ identities.
CSA LAW(CANADA): In 2018, the Canadian Securities Administrators (CSA) issued a notice clarifying that securities law requirements will apply to crypto-businesses offering coins or tokens. In January 2020, another notice clarified the situations where securities law would apply to platforms facilitating trading of crypto-assets. From 01 June 2020, Canada’s money laundering law requires all entities dealing in virtual currency to register with the Financial Transactions and Reports Analysis Centre of Canada (‘FINTRAC’) and implement the applicable AML/CFT measures.
By their very nature, cryptocurrencies are freewheeling, not beholden to country borders or specific agencies within a government. But this nature presents a problem to policymakers used to dealing with clear-cut definitions for assets.
By regulating at putting cryptos under regulation, there may be some monetary and price control effects that will be caused but regulation is important to protect the people and to maintain the trust of the beholders.
Regulating the currency will not only provide safety to the people who are currently trading in the market but will also attract more audiences towards it.