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Regulate, Don't Ban: The path for crypto's future
Any regulation that fortifies the technological ecosystem and promotes its adoption is a beacon of hope. "Regulate, Don't Ban" is not just a slogan; it's a heroic journey as we navigate the crypto landscape toward a brighter, regulated future
Cryptocurrency and law. Image: Shutterstock
It was in the midst of the Global Fintech Fest that the Finance Minister of India sounded a rallying cry: "Regulate, Don't Ban." This mantra is set to become the hero of the crypto narrative, guiding us toward a brighter future.
"We call for the swift implementation of the CARF (CryptoAsset Reporting Framework) and amendments to the CRS (Common Reporting Standard). We ask the Global Forum on Transparency and Exchange of Information for Tax Purposes to identify an appropriate and coordinated timeline to commence exchanges by relevant jurisdictions," the G20 Leaders' declaration reads, which was adopted by consensus in New Delhi at the concluding meetings of the G20 summit under India’s Presidency.
When Satoshi Nakamoto birthed Bitcoin, the odds of success seemed minuscule. Yet, it prevailed because it offered a solution to a global problem—a currency free from the clutches of any single nation. Traditional currencies have their limitations; they are confined to their borders. In contrast, Bitcoin stands as a global currency, transcending boundaries.
In 1959, Triffin's Paradox proposed the idea of a global currency, but the technology of the time rendered it a mere dream. Today, the internet has made it a reality, with Bitcoin as its embodiment.
Also read: Rationalise, regulate, revitalise? In search for crypto's 'RRR' moment with Budget 2023
Cryptocurrency operates under its own protocol, untouched by censorship, unrestricted by borders, and proudly decentralised. It rises above the realm of politics, having achieved this feat for 14 years.
As regulators prepare to introduce crypto regulations, the call to action is clear: "Regulate, Don't Ban." They must recognise the extraordinary nature of this asset class. Traditional regulatory methods are inadequate; a more comprehensive approach is imperative.
1. KYC and AML Policies:
Crypto's essence lies in decentralisation, and decentralised apps (dApps) often function without needing KYC, thanks to smart contracts. Regulating this aspect is undoubtedly challenging as the crypto ecosystem adapts to evade restrictions. The solution? Regulate the gateways—the exchanges and payment platforms that usher new capital into the crypto realm.
2. Money Laundering and Terrorism:
Though concerns persist about crypto's misuse for illicit activities, it's vital to remember that money laundering and terrorism have existed for decades. Crypto remains on the fringes and boasts a market cap of less than a trillion dollars. Cash has been the favoured choice in the shadowy world of crime for many years. Moreover, crypto transactions leave a trail, a crucial distinction from cash.
3. Regulation of Exchanges and Payment Gateways:
Regulating exchanges and payment gateways goes beyond KYC. Maintaining robust transaction tracing and proof of reserves mechanisms is essential. Flagged wallets interacting with exchanges should be programmed to notify authorities in real-time.
A globally coordinated crypto regulation is a distant aspiration. Many nations are still crafting their individual approaches. India must lay its regulatory groundwork before advocating international alignment.
Despite the challenges, the crypto industry's growth remains undeniable. India's crypto market has reached a sizeable $24.5 billion despite a dip of approximately -44 percent in average daily volumes. Currently, five to six active exchanges boast sufficient liquidity. While
While a less-than-friendly tax structure has prompted talent migration, the industry's growth rate is remarkable. Primary regulations are a necessary step to nurture this growth.
Regulators are tasked with safeguarding the populace against potential disruptions. However, overly stringent regulations can stifle innovation. History shows that innovation precedes regulation. Regulations tend to emerge in the wake of groundbreaking technological advancements.
As we approach the G20 discussions, "Regulate, Don't Ban" emerges as the hero guiding us forward. Regulators acknowledge that this technology is here to stay. Embracing it with judicious regulations is the prudent path.
Expect discussions to revolve around guidelines for standard KYC, AML/CFT, project regulations, ICOs, IDOs, IEOs, and, most crucially, exchanges and custodial wallets. A standard global KYC & AML/CFT framework could serve as the cornerstone for crypto regulation, sparking enthusiasm in both emerging and traditional technology markets.
Any regulation that fortifies the technological ecosystem and promotes its adoption is a beacon of hope. "Regulate, Don't Ban" is not just a slogan; it's a heroic journey as we navigate the crypto landscape toward a brighter, regulated future.
The author is the founder and CEO of CREBACO Global.
The thoughts and opinions shared here are of the author.
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