Question

Conduct internet research concerning the topic of regulating cryptocurrency as a security.

"Do you believe cryptocurrencies should be regulated as securities?" Explain and justify your answer with at least 350 words.

Answer 1

Answer:-

Regulating crypto currency as a security

Regulating cryptocurrencies

the way forward In light of these concerns, governments and regulators have taken steps to protect consumer interests and prevent financial crime activity. In July 2014, the New York State Department of Financial Services proposed Bit License, a comprehensive regulation of virtual currencies, after gathering inputs from a comprehensive community of bitcoin supporters and the financial industry. However, much remains to be done by the regulators in this area. We believe there are two areas where central banks and other regulators can play a direct and active role in regulating cryptocurrencies: The area of introducing or endorsing a closed loop currency and regulating points of conversion as well as intermediaries.

Challenges facing cryptocurrencies

  Speculation: Cryptocurrencies have no valuation basis, which has led to a speculative bubble. In addition, the severe volatility has led to a decrease in the usage and acceptance of the cryptocurrencies as most buyers choose to retain their holding in the hope of multiplying their values.

Control: Cryptocurrencies present a bigger challenge to central banks and governments as they can potentially compete with fiat money (paper money considered as legal tender by a government decree), which will impact their planning and monetary policy.

Jurisdiction: The openness and crossborder nature of cryptocurrency transactions and wallets presents a unique problem to central banks and governments in terms of jurisdiction and regulation.

Criminal financial activity: The most pressing cryptocurrency concern remains ensuring financial integrity, specifically, combating financial crime. The opacity of most cryptocurrency networks presents significant challenges for law enforcement authorities. The Financial Action Task Force (FATF) has determined the anonymity and crossborder reach of virtual currencies to be particularly concerning, with the points of intersection with a regulated fiat currency system posing the greatest money laundering (ML)/terrorist financing (TF) risk.

Hacking: A major reason for the volatility in the value of cryptocurrencies has been a lack of security. There have been a number of incidents where hackers have stolen currencies worth millions of dollars.

Similar to how the Internet changed the way people carry out their daily activities, cryptocurrencies and blockchain platforms will likely have the same transformative impact. Although still evolving, they have already introduced cheaper and quicker ways to carry out monetary transactions. It is only a matter of time before the world embraces this technology and works to overcome its constraints. Instead of pushing the cryptocurrencies to the periphery of financial systems, the central banks and other regulators as well as market authorities must play a leading role in making them mainstream. While challenges remain on jurisdiction in light of the borderless nature of transactions, one way to overcome these could be to regulate the points where cryptocurrency is exchanged for real money, goods or services. For this to happen, there should first be a comprehensive understanding of cryptocurrencies and a will to address related concerns.