As Blockchain and cryptocurrency become more widely used technologies, there is much discussion worldwide about regulations within this technology. When discussing regulation, blockchain and cryptocurrency go together, as they are inextricably linked. Yet as the technologies develop and change, which they do regularly, they become harder to regulate. At this point, no two countries have the same regulations, yet over 130 countries have issued laws and policies on the subjects.
As both Blockchain and cryptocurrency grow, and there is no denying the impact both are having on business and the financial systems around the globe, regional authorities are doing the best they can to issue regulations. Regulations, in the larger world players, are fluid, but there are four main things that authorities are trying to look at:-
- Create regulations that protect users.
- Protect users from fraud.
- Ensure that Blockchain is safe and secure.
- Ensure there is no mismanagement.
Regulations are hard because of the ‘unknown.’ Blockchain is a fairly new technology in most people’s worlds, as is cryptocurrency. There are over 100 countries where trading in cryptocurrency is almost ‘the norm’ and where companies use Blockchain all the time. Given there are two main cryptocurrencies – Bitcoin and Ethereum – many countries have tried to issue broad regulations, according to, but not limited by, these two.
The larger countries that we often look to for guidance in legalities – U.K., USA, Australia, Canada, Japan, Hong Kong, Singapore – are doing their best to regulate the ways we refer to cryptocurrencies. These include, but are not limited to:-
- Digital currency,
- Virtual currency.
- Electronic currency.
- Virtual Assets.
Trading is referred to as:-
- Virtual Trading
- Digital trading.
- Virtual commodities.
Pitfalls are acknowledged by the major players regarding the use of cryptocurrency, and in turn, Blockchain. Warnings about pitfalls can include, but are not limited to:
- Volatility of cryptocurrency
- Money laundering and counter-terrorist financing laws.
There are certain countries that have banned investing in cryptocurrency completely, mostly because they are worried about the use of crypto for terrorism, money laundering or unlawful activities, or because of fraud. Such countries include Algeria, Bolivia, Morocco, Nepal, and Pakistan, but are not limited to these countries only. Others, such as Bahrain and Qatar do not allow citizens to trade or deal in any activity connected to cryptocurrency within their borders but do not stop citizens from trading in other countries.
Most countries acknowledge the use of cryptocurrency and blockchain, but say people do so ‘at their own risk.’ This would include the USA, England, and Canada.
There are various schools of thought regarding the regulation of cryptocurrency, which is why regulations remain so fluid. Some countries see cryptocurrency as a threat, others are fully embracing. Those that have embraced blockchain and cryptocurrency see the innovation, excitement, and possibility within new technologies. Yet because of the unknown factors, and new technologies, the use of cryptocurrency is always aimed at being careful, at being aware of fraud and being aware of the possibility of crime.
We have mentioned that there are counties that do and do not embrace blockchain technology. There are other countries that do their own thing completely and create their own cryptocurrency. These countries include Venezuela who may see cryptocurrency as a way out of their financial crisis, the Marshall Islands and the Eastern Caribbean Central Bank.
Regulations for blockchain are new and there as yet, no obligations by any country to issue set regulations. To recap, and to understand why it is hard to regulate, blockchain is a list of records, known as blocks, all linked using cryptography. By design, they are resistant to modification of the data, which implies safety and security.