The cryptocurrencies came as a new wave with the introduction of bitcoin in 2009 and changed the entire transaction market as we see now. From the start of this civilization, the exchange of goods and services took place in various ways. Starting with the barter system to the introduction of weights and coins, the trade has evolved with the evolution of civilization. Many experts expect cryptocurrencies to be the following change in the evolving exchange systems. They take cryptocurrencies as the future of commerce and believe that they can change how we experience exchange today. Banks has started to adopt to these changes due to the impact of cryptocurrencies on the banking industry.
Right now, the primary exchange units that we all use are fiat currencies. They are issued and regulated by the government. With the introduction of cryptocurrencies and the significant inclination of investors to them came a number of challenges. It’s become essential to give cryptocurrencies and their regulations a thought. Here are a few reasons why cryptocurrency regulation is necessary to adopt it on a larger scale.
- The massive fluctuations in the market
Cryptocurrency is known for its volatility and how quickly it can swing between the extremes. For a currency to be adopted for a larger population, its holding value becomes essential. All the fiat currencies or gold prices remain somewhat stable. These ups and downs of cryptocurrencies may give a fortune or take almost everything away. These all uncertainties can be tackled with the proper regulation of cryptocurrency.
- The increased sense of safety
The unprecedented swings in cryptocurrencies still scare the majority of the population into investing in them. The sense of security becomes prominent if the currencies are to be used for a larger population. Many cryptocurrencies, though, work on blockchain technology, and theft is not easy. Yet, we have come across many scams that reduce the general public’s trust in these cryptocurrencies. Another reason for this hesitation is the lack of awareness in the general population about these cryptocurrencies and how they work. The regulation will pave the way for the general public to be more secure with their investments and learn and experience blockchain technology.
- Prevention of tax invasion
As with the upcoming bill in the parliament about the regulation of cryptocurrencies, one thing is clear that RBI and IRS don’t have favorable views about cryptocurrencies and how they work. With investment, it is mandatory to show your gains and losses. Still, many instances have come across where companies invest a larger share of their profits in cryptocurrencies and save the taxes because cryptocurrencies are not considered money. IRS is working its way to get a hold of all these tax invasions, but they also have a specific limit without the regulations. With effective cryptocurrency regulation, the tax invasion can be curbed efficiently and effectively.
- Prevention of Money laundering
Cryptocurrencies work on the technology of blockchain, which makes them entirely anonymous. Many criminals or individuals invest their ill earned money in cryptocurrencies and get away from money laundering to funnel illegitimate money or fund terrorism. With increasing money laundering cases, many exchange platforms have started getting the KYC done of the investors, but still, there are many platforms where you can trade cryptocurrencies anonymously.
Cryptocurrency has been here to stay for a long time. Some people believe that it is high time that government should accept the technology and consider it as an asset. The cryptocurrency also needs regulation because it cannot reach its fullest capabilities without being more secure for the general public to invest in it. The cryptocurrency market is relatively new and attracted a large number of investors to it, yet only a small number of the entire population is investing in cryptocurrencies. Hence regulation of cryptocurrencies is essential for more extensive adoption and to get the full benefits out of the technology.