Cryptocurrency Regulation: What Do You Need To Know?
The inevitable cryptocurrency regulation is coming. Last week, it was an announcement from the government of South Korea, who was looking at a possible ban on cryptocurrency trading. This week, the countries of France and Germany began talks of bitcoin regulation. Governments across the globe are looking to get involved with cryptocurrencies.
Regulatory Shutdowns Started In 2017
It was one of the first regulatory moves by a government. China instructed bitcoin and cryptocurrency exchanges to shut down by September 15, 2017. In what the government framed as “operating domestically without a formal license,” cryptocurrency exchanges received detailed instructions on the shutdown process, according to an article from CoinDesk. A leaked document issued by the Chinese government included shutdown instructions. Part of the instructions included a directive that exchange shareholders and core staff “cooperate fully with authorities during the clearing while staying in Beijing.” There was no further information on why staying in Beijing was required as part of the process.
South Korea Moves Toward Cryptocurrency Trading Ban
Last week, South Korea announced, “it plans to ban cryptocurrency trading,” according to a report from Reuters. This announcement sent bitcoin prices tumbling. At that time, the price for a bitcoin was at about $15,000. Today, it is a little above $11,000. This decrease represents a more than 25 percent fall in just 10 days. In an interesting turn of events, “the nation’s Presidential office, hours later said a ban on the country’s virtual currency exchanges had not yet been finalized while it was one of the measures being considered.” In fact, even after legislation relating to a ban is introduced, it could be a significant amount of time, even years, before any such prohibition would be approved and implemented.
India Cracks Down On Cryptocurrency Trading
Today, the Sunday Express reported that “banks across India are cracking down on bitcoin trade.” In fact, a representative from the Indian Ministry of Finance was quoted as saying, “the [Indian] government’s position is clear, we don’t recognize this [bitcoin] as legal currency as of now.” While acknowledging the technology “will not end,” the Indian government is taking the position that it will not engage in either accepting it as a payment mechanism or using it in any way. This announcement appears to have contributed to the extreme volatility that bitcoin is experiencing right now.
France and Germany Plan To Introduce Bitcoin Regulation Plans At G20
Another article from the Express announced joint plans this week from France and Germany. The piece cites French Finance Minister Bruno Le Maire as declaring that “the two countries will make joint proposals to regulate the bitcoin cryptocurrency at the next summit of the G20 group.” They cited concerns such as security and terrorism threats. This proposed clampdown could cause a further deterioration of the bitcoin price.
U.S. Regulators Make Important Announcements
In the U.S., regulators have begun to address cryptocurrency concerns. The IRS has issued instructions about how to handle bitcoin for tax purposes, depending on the transactions involved. The SEC has not yet approved any cryptocurrency trading or registered ICOs (initial coin offerings). Additionally, the Department of the Treasury has announced that “virtual currency does not have legal tender status in any jurisdiction.”
Cryptocurrency Future Is Unclear
Certainly, all the news about governmental bans and regulation contributes to the volatility of bitcoin and other cryptocurrencies. But the technology is here to stay and will have to be addressed. The concerns may be legitimate, but the actual regulation may be more difficult than anticipated. Technology is continually progressing, and governments are challenged in their ability to keep up. It is undoubtedly “buyer beware” if one is trading in the cryptocurrency market.
