Regulation in Cryptocurrencies

Cryptocurrency is a digital form of currency that makes use of encryption to generate and verify transactions. All the transactions that take place are added to a public ledger which is also known as the Transaction Block Chain. Unlike the fiat currencies (such as the US Dollar), cryptocurrencies belong to a decentralized system which makes them free of any regulations. Increasing investments are being made by a lot of financial institutions that are now incorporating cryptocurrencies in their business models.
Questions about the legality of unregulated form of currencies have led to eyebrows being raised about the legality of the cryptocurrencies as well. It was only a matter of time that this would happen. As of today, one of the most popular forms of cryptocurrency, Bitcoin is valued at a staggering $4,314.51.
Different approaches are being taken regarding the regulation of cryptocurrencies as an unregulated system poses serious risks to those who use the digital form of money. On the 4th of September, China introduced a blanket ban on initial coin offerings (ICOs) which is basically a crossover between crowd funding and initial public offering.
It was a drastic action that caused a major decline on the market cap of Ethereum by $6 billion and the price of Bitcoin to drop by $200. Apart from the abrupt ban on ICOs, China has also enforced strict regulations on the cryptocurrency market launching full investigations into any companies, organizations and individuals raising funds through ICOs and token sales. This sort of drastic action is likely to change the whole cryptocurrency ecosystem in the coming months.
Japan has had a more cryptocurrency-friendly approach to regulations. Eleven Japanese bitcoin exchanges have been granted approval to operate in their new financial services regulations. Registration with the Financial Services Agency has become a necessity under the new bill which recognizes bitcoin as legal tender and thusly eliminates the consumption tax on purchases at bitcoin exchanges.
Of course with Bitcoin being declared as a legal currency, reinforced security guidelines will follow, such as verifying customer identities which will help in combating the problem of money-laundering. The FSA has also stated that it will practice full surveillance on the bitcoin exchanges and it will introduce policies and systems that will provide proper cyber security to them.
The United States is considering a similar approach to cryptocurrencies with the acting Controller of the Currency, Keith Noreika saying that he is open toward cryptocurrency exchanges applying for bank status and imposing a unified regulatory framework for cryptocurrencies which will essentially eliminate regional licenses such as New York’s BitLicense.
The United States could take longer to offer unified licensing programs for the cryptocurrency exchanges but it is still presenting an optimistic outlook on the growth of the cryptocurrency market.
Is cryptocurrency going to be the new form of currency or will it die out? Nobody can say for sure and in light of recent events, the future of cryptocurrencies is still hanging in a balance and the scales can tip to either side.

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