To Regulate or Not To Regulate?
That is the question...
As time goes by and Bitcoin reaches more and more people the topic of regulation comes up more and more.
On the one side you have the Bitcoin purists that say it shouldn't be regulated in any way, and then on the other side you have those that say regulation would be good for bringing some stability and confidence to the entire space.
No matter which side of the fence you stand on, legitimate arguments can be made by both sides.
According to the CEO (Bobby Lee) of Chinese Bitcoin exchange BTCC, it's not even a question.
Bitcoin and cryptocurrency markets desperately need regulation according to Lee.
Specifically he had this to say:
"I think regulation is much needed for this new asset class because otherwise it'll run amok from society."
What kind of "amok" might he be talking about?
Well there was the flash crash of Ethereum about a month ago that took the price from $300 down to $.10 in a matter of seconds that comes to mind...
Also just the volatility of the entire space in general is something that can be hard to stomach for most investors.
The challenge?
I think many out there would agree that some regulation of the trading markets is needed, but the question is, what exactly is the best way to go about it?
Lee echoed that sentiment:
"The challenge for regulators is how to craft the rules around this new technology."
"I think it is taking lawmakers and regulators some time to wrap their minds around it, and to come up with appropriate rules and laws to govern companies, how we do business, to govern individuals, and how people conduct business online."
So they have to figure out how to regulate it for trading/investment purposes and they have to figure out how to regulate it for business transactional purposes.
Some regulation is already starting to happen.
Earlier this year the People's Bank of China set up a task force to carry out inspections and ensure bitcoin exchanges have implemented anti-money laundering systems. They have also issued warnings to exchanges of the consequences of not adopting these standards.
Central banks are currently undecided how they want to classify Bitcoin, which is really the crux of the problem. Once they have decided what it is exactly they can move forward with how to regulate it.
Most have decided it is an asset and should be treated accordingly.
Others have decided it is in fact a currency, like Japan, and have legalized and regulated it as a form of money.
According to Lee:
"Central banks need to start embracing the fact that bitcoin is a new digital currency that's being traded actively in China and around the world."
Not just an asset, but a currency.
Once they start considering it as such they can go about crafting rules and regulations around it.
Conclusions:
I am on the side that says we absolutely need some regulations of the cryptocurrency trading markets. It might sound bad at first, but the amount of confidence that it would bring to the space would bring tons and tons of new money into the space.
Institutional type money.
Yes, some of the anonymity would go away, but the increase in prices would more than make up for it. Plus they would probably put safeguards in place in case of hacks.
Similar to the FDIC insurance at banks.
In my opinion the benefits would more than make up for any negatives and it would just be the next step in bringing cryptocurrency to the masses.
Regulating it as a form of digital currency is a topic for another day... :)
Stay informed my friends!
Sources:
Image Sources:
https://news.bitcoin.com/government-will-fail-regulating-bitcoin/
http://www.coindesk.com/japan-considers-regulating-bitcoin-as-currency/
Follow me: @jrcornel
This is an extremely tough question. Without regulation designed to maintain stability, Bitcoin and others will be limited to a consumer base of speculators and traders. Regular people won't enter the market unless it is safeguarded and stable. But the attraction to Bitcoin and others is the freedom offered as a result of a relatively unregulated environment- the market dictates the direction.
With regulation comes less anonymity and opens the door for other ramifications that currently impact traditional currency markets.
Omg, those currencies...
joelfriedman68, we need more people like you on this channel.
Btw. you can find out about yourself at this terminal, I found you based on what the machine thinks I like about you, haha.
"Without regulation designed to maintain stability, Bitcoin and others will be limited to a consumer base of speculators and traders"
This is absolutely false.
Ok maybe I am the exception, but I am going to refrain from moving a significant amount of the income that I use to purchase goods and services into a currency whose value can be turned upside down overnight. Until I see consistent performance, I will just dip my toe in the market.
But I am new at this and my attitude may change as I gain more experience.
Yes. That is exactly the dilemma.
I think there's a compromise to be had. Bitcoin, as the major currency, gets some regulation which I agree it needs. But there's always room for really edgy, fully anonymous / "un-taxable" cryptos... The government will try and catch the people who use them, so it'll be a game of cat and mouse. I don't intend to get involved in such things - but I understand why hardcore crypto-anarchists would want to do so.
It's impossible to regulate people using cryptocoin software. It was designed specifically to make it impossible to control.
Exactly that. One can’t regulate algorithm. One can create a LAW to say what can be and what is forbidden. One can also create a LAW that will instruct the owner to send a portion of every transaction to the state. To do that would be another "hidden dictatorship" under the pretence of being democracy. That is totally undesirable by me...to hell with the money that would flow into it. I don’t need money. I need people willing to offer services for crypto...
the answer is
not just
NO
but
HELL NO
Absolutely agree! "regulation would be good for bringing some stability and confidence to the entire space." says Bobby Lee. Is that why regulation has brought so much stability and confidence to the US fiat dollar, or any fiat for that matter? I for one started investing into crypto because of the lack of regulation and the belief that all fiat money will eventually collapse. Also, "Yes, some of the anonymity would go away, but the increase in prices would more than make up for it." - sounds to me like trading your liberty for security. If you're willing to do that, you deserve neither. The anonymity IMO is crucial in the crypto market, one of the main reasons it took off to begin with.
I agree @everittdmickey with you.
If they regulate bitcoin, the goal and objectives of using decentralize crypto currencies is thrown away.
Let crypto alone #CryptoForever
if it's not mandated
it's prohibited
your masters have spoken
Within the next 5 years crypto is going to be regulated hard.
there are people becoming millionaires over night because of this, dont think that the government wont want their slice eventually
Well I think I speak for the majority in crypto when i say getting away from bureaucracy is what attracted us to crypto in the first place.
However, I do want someone to turn to when a crypto crime happens against me.
But not the Fed ... Never the Federal Gov...
I would prefer an organization of crypto users who set and regulate rules and when an investigation turns up criminal activity, it's turned over to the appropriate ( local to the crime ) authorities.
What this does is throttle exposure to uninformed & potentially bully Cops who don't know what Crypto is, or how it moves, etc. Those guys can't investigate anything within Crypto.
Usually they can't do more than take your statement, but given the data by a regulatory agency of civilians who's already documented the crime is more inline with why we are in Crypto.
IMO.
Regulation is good, enforced by the Fed Reserve, or other Fed Agency, ie: IRS, or even the State IS BS. Both of which ( state & Fed ) are bankrupt, you think they won't confiscate your assets, LOL - don't fool yourself.
IMO.
I agree we do need some sort of some regulations but I don't want it to be the Fed or the bankers.
To regulate! :D
It's a tricky question to answer. A lot of development is seen in the cryptospace since it's free and unregulated. People are allowed to dream up every possible product and use-case.
On the other hand, regulation would bring a lot of capital and adoption into the cryptospace. Is this something we want tho? The whole point of decentralized solutions is that the big actors do NOT get to control it.
Do we really want to hand the revolution back to the "regime"?
Caught between a rock and a hard place.
First off, why do you think the internet was such a runaway success? I argue a big reason was because it was unregulated and untaxed for at least 20 years. It's odd that Silicon Valley fools don't understand this when they claim to be libertarians and then vote for democrats.
Second, if you wish to regulate cryptos, how? The centralized exchanges seem to be the only way to put some regulations into place. What about a decentralized exchange? I guess you could try to force the controlling "foundation" to abide by some type of regs. But, what if all the voters (miners, stakers, etc), whom are dispersed around the world, not just US vote against it?
Third, there are already regulations on US citizens, i.e. people are supposed to be paying taxes.
But, as to regulating the currency itself? I am not sure how that is accomplished. And, what is meant by "regulating" it in the first place?
Thanks man! Your arguments are the most complete I've ever heard off!