Bitcoin regulation – Bitcoin is undoubtedly the most powerful and influential cryptocurrency of the 21st century, ease of transaction is a top notch, however its anonymous nature has continued to raise eye brows as to how it could be used negatively.
In the light of this, there have been calls in recent time for bitcoin regulation, which adversely should make the crypto currency accountable on various fronts.
For example, The European Central Bank President (ECB) Christine Lagarde recently lends her voice to the need for a jurisdictive regulation and accountability of how bitcoin is being used, transferred, to who it’s being transferred and what it’s being used for.
Against the idea of many, this may not constitute a good trend aimed at the most popular crypto by the Central banks of nations, which in the end could destroy the purpose and objectives of creating bitcoin in the first instance.
What is bitcoin regulation?
As you are aware, bitcoin and other cryptocurrencies were founded as decentralized digital currencies, to this end, their structures took a form that ensure and make it difficult to be controlled by any monetary policy as provided by the governments of the world.
This means to say that the activity of bitcoin is not regulated by the Central banks of this world whatsoever, as such it reserves the right to operate with every flexibility it deems necessary at any time.
Talking about bitcoin regulation simply means, to put bitcoin under control provided by the Central bank framework in every country.
Pa adventure, its regulation is achieved, bitcoin and other cryptocurrencies will operate like the usual fiat conventional currencies we have.
Why bitcoin was created
Going down memory lane, Satoshi Nakamoto wanted to create a trust-less cash system, which on a broader perspective is to remove the third party intermediaries in money transfer services.
It should further stem the unwholesome charges that come with sending and receiving money transfers around the world.
Was he able to achieve this with bitcoin? Sure he did, it has been a rollercoaster ride for the digital currency since its creation, it has in fact gained more users and confidence over the years.
ECB view on bitcoin regulation
The European Central Bank President in her remark stressed the fact that digital currency is being used for money laundering activities in most cases, thus loopholes must be closed to forestall further development in the wrong direction.
Given to the assuming popularity of bitcoin, the value has increased tremendously in the last few months, notably, ordinary people, investment funds and corporations have shown great interest.
But a down side to it in this context as pointed by “Christine Lagarde” is its anonymous nature, which to a large concern is believed to have aided money laundering and other related financial crimes, citing cases and investigations underway into financial dealings.
How bitcoin regulation could kick against money laundering and terrorism financing
It’s not difficult to understand that moving huge funds for illegal activities is grossly termed financial offense, while such funds are not only monitored and kicked against, their applications are grossly dangerous to mankind.
Moving such funds through the conventional financial institutions have become stiffer and countered at different times since their tact is well known.
Make good to understand that terrorist activities are being sponsored hugely with the aid of finance, disjointing the fund supply should invariably weaken the actors who mainly are empowered through illegal funding for purchase of weapons and other accessories.
Drug pushers will always fall back to the conventional institutions to move proceeds of their ill gotten money through money laundering; placing, layering and integrating are all stages these funds go through to appear clean having being integrated into the world economy.
They would hardly pass noticed.
Since conventional financial institutions being regulated by apex bodies still have lapses through which these funds sometimes get filtered into the economy, it then becomes necessary to regulate a free flowing channel like bitcoin which both senders and receivers operate anonymously.
For example, the banks put their customers through a “Know Your Customer” “KYC” with a “Premise Visitation Report” “PVR” process, this is aimed at identifying individual customer uniquely.
Their income report, source, monthly and annual revenue are not out of context.
These are measures that ensure once a customer receives above usual threshold or amount termed outrageous, (Suspicious Transaction Report) “STR” would be filed against such customer to indicate that something unusual happens.
All these indices help the government regulate and control money transfers, but that cannot be said about bitcoin.
Apparently, it has been believed that non regulation of bitcoin and other cryptocurrencies have triggered a surge in money laundering and terrorism financing.
Bitcoin regulation will ensure that users with malicious intent will have to draw back since the aim of the regulation is to identify individual senders and receivers with unique identity.
Frequently asked questions on bitcoin regulation
#1 Bitcoin regulation risk
Talking about bitcoin regulation risk is equivalent to discussing what risk can be associated with trading or investing in bitcoin.
Fraud and money laundering can be seen as a risk associated with bitcoin, it has been established that bitcoin provides criminal organizations with a means of committing crime and moving money without being detected.
It’s difficult to recover missing fund when a bitcoin exchange is hacked, this leads to lose of funds since there’s no standard established for recovering these funds.
#2. Bitcoin price
The price of bitcoin is determined by the market forces of demand and supply of bitcoin at a time.
This implies when holders are willing to sell and when they are likely not to.
When holders are selling and not buying, bitcoin availability becomes much without resultant buyers, at this point you should expect a price shift downward and viz versa.
#3. Bitcoin legal countries
At this juncture, we are talking about countries that legalize the use of bitcoin
- The Unites States
- Germany and many more countries
#4 Bitcoin banned countries
This refers to countries that say no to bitcoin, they include but not limited to;
- Columbia and many more
Talking about bitcoin regulation, while the effect caused by criminal users will not be relegated, it is likewise very necessary to consider the fact that a lot of genuine individuals, corporations and organizations have found solace in bitcoin, their activities have likewise not caused any pain to the world and should be put to consideration.
In the meantime, did you think bitcoin will be regulated in the near future? Well, that’s left to be seen.