Status update.. US Government Agencies Honing in on Proper Cryptocurrency Regulation

in #crypto6 years ago (edited)

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As many of us are aware, many countries are still in the queue of debate about cryptos. Regulation of cryptos is a dicey topic. Given the decentralized and trustless nature of such currencies, enforcing active regulation may prove to be challenging. Even so, US officials are inching closer toward achieving such official guidelines for Bitcoin and altcoins. Doing so will solve not one, but two of cryptocurrency’s bigger problems.

Bitcoin Regulation in the United States
For the past few years, regulators have kept a close eye on cryptocurrencies. That makes sense, as this new form of money has made a significant impact on the world. Consumers demand more exposure to price volatility, preferably without buying Bitcoin itself. Financial institutions are also trying to get in on the action by potentially launching cryptocurrency trading desks.

All of these developments put a lot of pressure on lawmakers and regulators. This issue was compounded by the launch of Bitcoin futures contracts. While technically a legal investment vehicle, this is not a regulated offering. Addressing all of these shortcomings is not an easy task. One also has to keep in mind how regulating cryptocurrency is very different from regulating banks. Even so, some correlations can be drawn between the two in the end.

The lack of cryptocurrency regulation also poses a bit of a problem. To many consumers and corporations, it is a “controversial aspect”. This may explain why the global interest in Bitcoin and consorts is still relatively low. Additionally, there is the perceived anonymity aspect associated with Bitcoin. The world’s leading cryptocurrency is pseudonymous and not anonymous, which is a very big difference.

Finding the Right Approach
So far, the US regulators have not made any big impact on cryptocurrency. The one legal requirement most people are familiar with is BitLicense. It is a form of regulation drafted by the NYDFS. Unfortunately, it also drove nearly all cryptocurrency service providers out of the state of New York. That particular approach needs to be avoided at all costs. The Justice Department is trying to remove anonymity and privacy from Bitcoin trading altogether.

To put this into perspective, the current approach mainly revolves around more KYC and AML procedures. The Justice Department is intent on gaining more insights into the money flows of Bitcoin. With blockchain analysis firms playing an increasing role of importance, that may be easier to achieve than first imagined. Outside of cryptocurrencies, there are also initial coin offerings to remain very wary of.

It will take time until Bitcoin regulation becomes tangible in the United States. Three government bodies are working on addressing this situation. The Justice Department, CFTC, and SEC are all pondering how to move forward from here. The answer is not straightforward by any means, which is only to be expected. Regulating a decentralized industry poses many challenges. This will only become more apparent once centralized exchanges are replaced by their decentralized counterparts.

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I have a feeling I read this article somewhere else. Deja vu!

Yah sure. I don't think you're mistaken I have included the source page so others can get more information.
Thanks.

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