Regulatory changes changed the landscape of the cryptocurrency market in the last months. In fact, 2018 marked the beginning of crypto regulatory changes for different parts of the world. The year was an eye opener for the industry especially when it comes to dealing with pertinent issues surrounding the market.
For instance, you have the hesitation of many regulators regarding the possible use of blockchain technology to money laundering, tax evasion, and other illegal activities. China, for instance, has been looking to completely ban cryptocurrencies in the country. However, there are also other countries that gave the industry a more open-minded approach.
The economic and financial affairs ministers coming from European Union countries are going to hold a meeting regarding the possible regulatory changes that can be applied to the industry. In a draft, the participants are going to take a closer look at how cryptocurrencies are used for tax evasion, money laundering, and even for terrorist financing. The meeting is going to be held in Vienna, Austria on September 7.
Previous Warning vs. ICO
ICO is another issue that needs to be addressed in the European Union. The European Securities and Markets Authority (ESMA) already gave a warning to potential investors who are looking for initial coin offerings that they can invest in. ESMA warned that the lack of understanding not to mention the unregulated nature of the market can pose some problems for the investors. Since ICOs exist outside of the global financial regulations, there are no rules that can protect the investors in case there is an incident such as a cyberattack that took place.
However, one fact remains that despite the warnings by the EU financial watchdogs, ICOs remained popular in this part of the world.
Regulating Digital Currencies
The EU Fifth Money Laundering Directive on July 9 came in effect and it now tackles the issues regarding digital currencies. What this offers to the table is that it enacts stricter transparency requirements that are directed to the use of “anonymous payments through prepaid cards” and “virtual currency exchange platforms”.
A Stance Not to Ignore Cryptocurrencies
In July, the EU’s Policy Department of Economic, Scientific, and Quality of Life Policies submitted a report that was entitled “Virtual currencies and central banks monetary policy: challenges ahead”. It was written by Marek Dabrowski and Lukasz Jakikowski. They evaluated cryptocurrencies as potentially disruptive but a novel technology that shouldn’t be ignored by the regulators. It was also written in the report that regulators shouldn’t ban them. In addition to this, virtual currencies, instead should be treated just like any other financial instrument.
It is true that EU has taken a far less drastic approach in regulating cryptocurrencies. However, no one has an idea yet what could be the result of the meeting.
In other parts of the world, there is also progress when it comes to regulating cryptocurrencies. The US SEC has now considered Bitcoin and Ethereum as a commodity. In addition to this, you have the possibility of having a Bitcoin ETF soon. However, the agency has declined a number of applications already.