Despite changes in regulations, there is still uncertainty about the future of cryptos. The problem with crypto regulations is that different countries have a different opinion on what to do with digital currencies. For instance, Reserve Bank of India gave banks an ultimatum to cut ties with crypto exchanges. In addition to this, India’s Supreme Court refused to lift the ban.
In the US, there US Securities and Exchange Commission may have considered Bitcoin and Ethereum as commodities, but the likes of Ripple are still not classified whether as a security or a commodity. The bottom line is that crypto regulatory changes can make or break the business. However, it seems that the EU has a pro-crypto stance.
European Union is Pro-Crypto
Recently, the European Parliament published an in-depth analysis that pertains to cryptocurrencies. The EU Parliament is urging regulators in the 33-page document to not ban digital currencies. In addition to this, the EU Parliament also stressed that countries shouldn’t be ignoring cryptos. According to the report, “policy makers and regulators should not ignore VCs, nor should they attempt to ban them. Both extreme approaches are incorrect”.
The report plays a major role because it gives us an idea regarding the state of the current financial systems. Though there are those who think that cryptocurrencies are a threat to banks, the report doesn’t think so. According to the report, it is unlikely that cryptocurrencies can compete with sovereign currencies that are used by central banks. It pointed out that there is a discrepancy in the market capitalization of both the crypto market and that of fiat. In April, a crypto market cap was below $300 billion compared to broad money within the US has reached $14 trillion in 2017.
A Need to Regulate
There is a need though to regulate cryptocurrencies. For instance, in 2018, there’s already an increase in the number of cases related to crypto hacking on cryptocurrency exchanges. And in addition to this, there is three times the number of money laundering cases because of this.
In fact, Japan has made the necessary changes in order to protect investors. There is currently a strict guideline that crypto exchanges have to follow before they can operate in the country. This was after the $530 million theft of NEM on Coincheck.
Recently, Japan’s FSA is reportedly looking to bring crypto exchanges under the Financial Instrument and Exchange Act (FIEA). This means that cryptos could potentially be classified as a “financial product” and therefore it could lead digital currencies to mainstream financial markets.
Europe’s Confusing Regulations
The truth of the matter is that there is a need for a unified crypto regulation, especially in Europe. The crypto regulations in Europe is complex compared to other regions mainly because the EU has a different take compared to that of independent members.
Could this paper make positive changes for the crypto market especially in the coming weeks? Now that the EU Parliament in their study is has a pro-stance, will this be able to help Bitcoin recover its price? Since Bitcoin is already trading above $6,500, will it be able to break into the $7,000 level because of this report?