Cryptocurrency is a digital or virtual currency. This currency uses cryptography. This technology allows for verifying transactions and controlling the creation of new units. It operates without dependence on a central bank, and individuals can transfer it right to each other. This eliminates the need for intermediaries like banks. Cryptocurrencies are decentralized. They aren’t controlled by any government or financial institution. Their value depends on supply and demand in the market.
Now, it is difficult to regulate digital currency in every way. Yet, there are several good reasons to regulate cryptocurrency:
- Consumer protection.
Cryptocurrencies are a safe and secure alternative to traditional financial systems. Yet, they are also associated with a high risk of fraud, theft, and scams. Regulation can help protect consumers from these risks.
- Anti-money laundering (AML) and counter-terrorism financing (CTF).
Cryptocurrencies can function in illegal activities such as money laundering and terrorism financing. Regulation can help prevent these activities by enforcing AML and CTF laws.
- Taxation.
Cryptocurrencies are not subject to the taxation laws of traditional financial transactions. Regulation ensures that individuals and businesses are subject to the same tax laws.
- Greater financial stability.
Cryptocurrencies can have an impact on financial stability. This is because their value can fluctuate often, and they can circumvent traditional financial systems. Regulation can help mitigate these risks. It also ensures that the use of cryptocurrency does not threaten financial stability.
- Innovation.
Regulation can also promote innovation in the cryptocurrency industry. It provides clear rules and guidelines for companies and individuals operating in the space. This can help increase trust and confidence in the industry and attract more investment and talent.
Buying and exchanging crypto at exchange platforms is widespread, and many people trade coins like XTZ to ETH and others. Several institutions started to regulate crypto in the United States. They serve as a crypto regulation. For example:
- The Securities and Exchange Commission (SEC),
- The Commodity Futures Trading Commission (CFTC),
- The Internal Revenue Service (IRS).
- Together, they handle crimes inside the sphere, control investments, and taxation of crypto as income.
What Laws Exist in the US to Regulate Operations With Cryptocurrency?
Crypto regulation differs in different countries, and doesn’t exist in the majority of them.
To tell the truth, this is only a drop in the ocean. Cryptocurrency can’t be regulated in full. Their nature is that they are not meant for regulation or centralization. Though digital money isn’t subject to complete regulation, different cases of fraud and defaults took place. They have proven that there is a need for laws and supervision before we learn how to use the DeFi in a proper way.
For and Against Cryptocurrency Regulation
To sum up, the regulation of virtual money turns out useful since it offers these benefits:
- Protection for investors.
Cryptocurrency regulation can help protect investors from fraud and other types of misconduct. It also provides a framework for preventing scams.
- A level playing field.
Regulation can provide a level playing field for all participants in the cryptocurrency market.
- Increased adoption.
Some argue that regulation can help to increase the adoption of cryptocurrency. It can provide more stability for businesses and individuals. This could lead to greater innovation and investment in the industry.
As for drawbacks, they can be:
- Decreasing decentralization.
This can undo the very purpose of creating cryptocurrency.
- Harming privacy.
Crypto transactions have special value as they are more private than conventional operations. Certain regulations can infringe on a user’s rights to privacy.
- Hindering innovation.
Some claim that indulging in regulation too much will lead to suppressing blockchain development. This includes decentralized apps, metaverse, etc.
To buy crypto in a legal way, consider some of the popular options such as Binance, Coinbase, Gemini, Kraken, and LetsExchange. The latter is the platform with over 2,000 coins and tokens to exchange, e.g. ETC to ETH, and buy with fiat money. It offers instant crypto-to-crypto and crypto-to-fiat conversions.
