International lawmakers are moving to tighten up the world of digital currency amid tales of fraud, hacking and organised crime dogging the internet.
Moves are underway in Japan, South Korea, the US, UK and European Union to drive the cowboys off the web.
Regulators take the view that cryptocurrency is not a problem, but a technology to nurture – but the sharks feeding off innocent investors must be controlled.
Their aim is to champion the rights of consumers, while curbing the activities of the crooks trying to make a quick buck from them.
One cryptocurrency expert, Nigel Green, founder and CEO of international financial services company deVere Group, hails the vital work regulators are carrying out worldwide.
The company is at the forefront of digital currency investment and has recently launched an exchange app, deVere Crypto.
“Governments and financial regulators around the world are increasingly focusing their attention on cryptocurrencies. Their vital work to warn investors of potential risks, to crackdown on criminal activity, and to potentially establish regulations must be championed,” he said.
“Since the launch of Bitcoin in 2009, digital currencies have been operating in a regulatory vacuum. However, I hope and believe that this is soon to change as international financial watchdogs respond to the growing interest in, and popularity of, cryptocurrencies.
“To my mind, there is no question that regulation is necessary and is on its way. It is clearly an area in which there is an enormous need for a robust international regulatory framework and strict ongoing supervision.”
Tackling the exchanges
Recently, South Korea’s Finance Supervisory Service (FSS) has indicated the government has plans for self-regulation; the Swiss Financial Market Supervisory Authority (FINMA) has treating some cryptocurrency offerings as securities; the Securities and Exchange Commission of Zambia has issued a public notice on cryptocurrencies; and Spain is reportedly drafting legislation that will help attract cryptocurrency and blockchain companies to the country.
In the UK, the Financial Conduct Authority is publishing a market review later in 2018.
“One of the best ways to address the regulatory issues is via the exchanges,” said Green.
“Nearly all foreign exchange transactions go through banks or currency houses and this is what needs to happen with cryptocurrencies. When flows run through regulated exchanges, it will be much easier to tackle potential wrongdoing, such as money laundering, and make sure tax is paid.
“For this to happen, banks will need to open accounts for exchanges, which is why they must be regulated.”