As cryptocurrency continues to grow at an extraordinary rate, it is no surprise that regulators around the world are stepping in to regulate the space. The nature of cryptocurrency, which is decentralized, has posed various problems and threatened the financial market in many countries. Despite it being a problem solver in crisis countries, regulators are still concerned over money laundering and the use of money in dark web going untraceable.
From China banning cryptocurrencies altogether to the DAO report, 2017 was the peak year for cryptocurrency growth. It is possible that we will be seeing explosive growth in 2018 as well. In fact, there have been mixed responses from regulators around the world, ranging from issuing alerts to complete banning of the cryptocurrency trading. In addition to the growth of cryptocurrencies, there is also an increase in the ICO funding model. Due to the high uncertainty and the level of scams reported from this base, it has resulted in countries such as South Korea and China banning the ICO space.
In this article, we will look in detail at the regulatory policies that have been implemented in the past 12 months. It is vital that we analyze the rules of the industry as it will define the future direction of cryptocurrencies.
The outlook of cryptocurrencies in China
In 2017, China’s three biggest Bitcoin exchanges were given a warning by the Central Bank of China. They were warned to stay compliant with relevant laws and regulations if they want to continue operating. In February, things started to get intense when withdrawals were frozen and new trading fees were imposed. When asked why the People’s Bank of China stated that these were done to curb the risk of money laundering. It was not until late May that all the funds were returned to users.
In the months ahead, the Chinese government finally asked all the cryptocurrency exchanges to stop trading and shut down in September. This has successfully ended the reign of the three largest exchanges within China. However, this is not discouraging Chinese investors from investing in the cryptocurrency scene. All they have to do is move their funds to another country to trade. News of the shutdown came after the country ban ICO’s within their borders.
The China government stated that the ICO is an illegal way to raise money. It is yet to be known whether cryptocurrency will make a comeback in China, but it is reported that the government has no intention of shifting their stance.
The DAO report
For months, it has been rumored that the SEC will define how we will regulate ICO. However, the announcement came in late July that taxes would be imposed on some of the tokens sales depending on the nature of the token and the manner that it was offered. At the heart of the DAO was the ICO mechanism. In fact, they successfully raised millions of dollars worth of cryptocurrencies through the sale of DAO tokens. Despite this, it collapsed due to an exploit which caused months of heated debate.
This has also resulted in the split of the Ethereum blockchain. In the SEC report, they also classified the DAO as securities. In their report, they warned celebrities against endorsing ICOs, or any public stock cams, as these influencers bear a huge impact on their following.
Russia reconsidering cryptocurrencies
In Russia, the government has been going back and forth with their stance on cryptocurrencies. There are rumors that President Vladimir Putin is ready to accept cryptocurrencies back within the country after banning trading. There is also ongoing research on how the use of blockchain and technologies can be developed within Russia. Also, the Russian State government is interested in integrating blockchain within their system. The change in perspective came after the president met with Ethereum’s creators. Other leaders in Russia are echoing support for President Vladimir’s decision to reconsider cryptocurrencies.