Blockchain regulations a reality… maybe!

The rise of Crypto or Digital currencies has been spectacular over the last couple of years, with many labeling it as the money of the future, it is set to disrupt the world’s economy norms. However, with its newfound popularity, the use of cryptocurrency is raising quite a bit of ethical questions. Recently, the focus had been set on the Jurisdictions and regulations of digital currencies. Many nations have passed or are attempting to pass regulatory bills to better control and regulate the usage of this blockchain technology. As of today, a dozen countries have put in place strict blockchain regulations on this technology.

 

Asia

Countries such as South Korea and Japan have implemented severe regulations on digital currency exchanges. Both nations have enforced governmental registrations and additional procedures under their respective national agencies. Furthermore, due to the recent event of the Japanese based “Monex Group” system hack of 58 billion yen worth of Coinchek (a Japanse cryptocurrency exchange); Japan’s Financial Service Agency (FSA) has put in place a series of amendments to guarantee crypto investor and trader financial security.

In India, cryptocurrency exchanges and blockchain regulations are known to be the harshest. As of April 2018, “Reserve Bank of India” (RBI) prohibited any banks and financial institutions from interacting with digital currencies. The regulation illegalized cryptocurrencies trade and exchanges at the domestic level.

Lately, January 10, 2019, the Chinese government decided to establish Anti-Anonymity regulations for blockchain related companies. China’s Cyberspace Administration (CAC) is set to enforce these laws as early as February 15, 2019. As stated by the agency, these measures are put in place in order to ensure the healthy growth of the blockchain industry. Furthermore, under these guidelines, companies dealing with blockchain technology will be forced to register their domains, names and server addresses under the cyberspace administration within the first 20 days that these laws will be in effect. Under these restrictions, the CAC will have access to blockchain startups stored data and will require registration procedures for clients using their ID card or mobile phone numbers.

Companies that fail to comply with these guidelines will be faced with fines ranging from 20,000 to 30,000 yuan ($2,900 to $4,500) or even criminal investigation if offenses are repeated.

North America

While cryptocurrencies policies and regulations vary at the state level, the United States “Security and Exchange Commission” (SEC) has shown incentive to enact security laws targeting digital currencies exchange and wallet. SEC is a U.S. federal agency with jurisdiction to protect investors and regulate the trade market. SEC’s main concern is the idea that bitcoins and other forms of digital currencies give investors a false sense of safety and benefits from the registered exchanges.

The SEC states in a communique on its website ” Many platforms refer to themselves as “exchanges,” which can give the misimpression to investors that they are regulated or meet the regulatory standards of a national securities exchange.” Additionally, the agency believes that “… these platforms give the impression that they perform exchange-like functions by offering order books with updated bid and ask pricing and data about executions on the system, but there is no reason to believe that such information has the same integrity as that provided by national securities exchanges.”

Additionally, in the North American region, Canada has taken steps to regulate cryptocurrency exchanges. Under the jurisdiction of the “Canadian Security Admission” (CSA), Canada’s federal government has enabled securities laws concerning cryptocurrencies.

Europe

In the European Union, digital currency and blockchain regulations are dealt with at the regional level. However, in some member nations, digital currencies exchanges have to be registered with their respective national agencies. Germany’s “Financial Supervisory Authority” or BaFin  states on its website

“ Those buying and selling VCs commercially in their own name for the account of others carry out principal broking services which are subject to authorisation. The purchase and sale of VCs is made for the account of others when the economic advantages and disadvantages of that business affect the principal. In addition, the activity must be similar enough to the broking services within the meaning of the German Commercial Code (Handelsgesetzbuch), although individual rights and obligations may deviate from those typical for broking services.”

These authorizations accorded by the federal agency can then facilitate exchanges within the territory. Additionally, the EU agreed on implementing the “Fifth Money Laundering Directive”(5MLD) in April of 2018 to prevent the use of Cryptocurrencies for money laundering and terrorism financing.

Latin America

The regulation of digital currencies in the Latin America region are limited. The majority of its countries have practically no specific legislation or regulations to monitor cryptocurrencies related activities and exchanges. However, Mexico due control to a degree digital currencies exchanges. Mexico has also extended its Anti Money Laundering laws (AML) to financial technology companies.

Africa

In the African region, the blockchain and cryptocurrency craze has yet to be fully adopted in the vast majority of countries. However, firms in Kenya and South Africa,  have taken important steps to vulgarize blockchain technology in Africa. In Kenya, the Kenicoin is one of the two cryptocurrencies originating from Africa, the other being the AKoin founded by the global artist Akon. So there are zero to no blockchain regulations in the field of cryptocurrency in this region. But the Kenyan’s central bank has warned the public in investing in digital currencies due to their high volatility.

 

It seems that 2019 will be the year of regulations for cryptocurrencies worldwide. If this becomes the case, in some regions of the globe, the mass adoption of blockchain technology might increase, while a decrease in others. At the moment, it is impossible to know exactly how future laws might affect the growth of this technology, but it safe to assume as of now, this craze can’t be stopped. On the other hand, investments on the decentralized technology are increasing tremendously compared to last years and even old venture capitals are eyeing it. However, with the implementation of new regulations, the future seems uncertain.

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Henry-Claude Madiba

Renewable energy engineer in training. I am only interested in two things, blockchain technology and contributing to making the world a livable place for the next generations.

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