Will Regulations Kill Cryptocurrency?

 In Technical View

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Will Regulations Kill Cryptocurrency?

With each passing day, more cryptocurrency regulations seem to come to the fore. The word to pay attention to here is seem, however, because very few concrete regulations have, in fact, materialized.

If that’s the case, then why are exchanges like Binance, Bittrex, Bilaxy, and others beginning to delist altcoins for customers in many countries, most notably the USA? In general, exchanges are trying to anticipate regulations, taking hints from some rulings for and against different crypto and ICO projects, to stay on the compliant side of the law before it comes to light.

Is that an intelligent approach? Are crypto exchanges, projects, and investment groups stunting crypto’s growth by applying imaginary regulations before they actually exist?

Why Cryptocurrency Regulations Matter

It’s a bit awkward discussing crypto regulations because blockchains, in theory, are completely decentralized and not under the control or influence of any centralized group, government, or authority. That’s how it’s supposed to work. But, by now it’s apparent that not only are cryptocurrencies deeply under the influence of centralized interests, but investors themselves actually hope for their favorite decentralized project to partner with legacy companies like Visa, PayPal, and Alibaba.

For the latter to happen, cryptocurrencies will need to abide by the regulatory concerns of the jurisdictions in which they operate. Case in point is Libra, Facebook’s new cryptocurrency project. Upon unveiling the project to the public, Libra and Facebook immediately came under heavy scrutiny from governing bodies around the world simply because none of those entities have the infrastructure in place to deal with something as new as Libra. 

When it comes right down to it, governments need to regulate cryptocurrency to feel that they not only understand it, but that they also have it under control. Cryptocurrencies, for their part, are willing to cede large amounts of their autonomy to curry favor with incumbent authorities so that their projects can flourish financially. 


Are Regulations Hurting Crypto?

Cryptocurrency regulations carry the threat of harming the development of projects at an early stage. If the rules are too severe, then projects that need a vast amount of regulatory space may find themselves up against too many roadblocks, too early on.

Very recently, the SEC, America’s governing body for securities and exchanges, took social messaging app Kik to court for its $100 million KIN initial coin offering. The ICO, held in 2017, set an unprecedented record for crowdfunding when it was held. 

Now, the SEC contends that Kik offered unregistered securities to investors and is demanding reparations be made. The case is likely to set an important precedent for ICO regulations that will follow the cryptocurrency industries for years – even decades – to come. Clearly, having the SEC at their back isn’t helping the Kik team develop and deliver the project.

However, not all exchanges and crypto insiders are self-regulating according to theoretical rules. Some, like Beaxy exchange, contend that until they’re directly told to stop providing services to American customers by a relevant authority, they’ll simply continue as normal.

Cryptocurrency regulations need to be crafted with a balance between freedom and investor safety – but not at the expense of the growth of what is a very nascent industry.

Will Regulations Kill Cryptocurrency?

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