One of the most controversial topics in the world right now is Cryptocurrency. Despite its short time in existence, it has been making waves and causing controversy like no other. There are many conflicting views of Cryptocurrency especially by Monetary bodies. While some believe that they can replace fiat currencies, others believe them to be a massive scam. And to make things even more interesting there are those who believe that they simply could be a part of a new monetary system, never having any hope of taking over the market completely.
Over the past couple of years, the value of cryptocurrencies has propelled to the unprecedented heights, creating a buzz in everyone’s mind. While a good many financial institutions are looking to join this ‘revolution’, others are still deliberating upon with their options. So how is it that financial institutions are responding to Cryptocurrency? Let’s find out!
With a market cap of $750 Billion and increasing, cryptocurrency has captured the attention of one and all. Recently, the finance minister of India announced that the government will soon launch cryptocurrency regulations. When we consider that the valuation of Cryptocurrency is over 50% higher than the market value of Goldman Sachs Internet Investment Group (i.e., a $400 billion enterprise), it’s but obvious that cryptocurrencies have become a substantial part of our financial system within an unbelievably short time period. So how does the central bank stand on this?
In order to understand the unbalanced and unfairly negative attitude of most monetary bodies towards Cryptocurrency, it’s important to remember that cryptocurrencies will likely never be accepted by monetary authorities or banking as a means of exchange. Even though it is not ruled out, it seems very unlikely in the foreseeable future that we will see any government officially adopting crypto.
The stance of monetary bodies on Cryptocurrency is an important aspect of the initiation and development of any cryptocurrency. Some countries have taken a more adaptable approach to Cryptocurrency while others have restricted their use. The stance of monetary bodies on Cryptocurrency is one of two things: indifference, or hostility. Some ban it completely, others take a hands-off approach, and there are some that have tried to manage it in the past but no longer do so.
This is mainly due to the fact that cryptocurrencies are built on the idea that governments, banks and other financial institutions should not be controlling or influencing them. Right from the beginning, it was created to allow for decentralization of money which means people spend them as they see fit rather than being controlled by banks and governments. First of all, opinions by different monetary authorities have been released within a short span of time.
All around the globe, the governments and banks are tightening their grip on Cryptocurrency. In some cases, this is being done by making a massive effort to criminalize it – for example, in Russia. In others, such as India, this is taking place by introducing numerous rules and regulations. These regulations are designed not to crush Cryptocurrency but instead to regulate it so that it can continue to grow while at the same time preventing it from falling into the wrong hands.
With uncertainty about the future of cryptocurrency, it’s important for you to know where the American Monetary Council stands on its regulation. We have adopted something of a wait-and-see approach — taking note of Cryptocurrency along with other financial topics as they arise, particularly blockchain. The focus of this article will be the AMCs stance regarding Cryptocurrency in the United States
The stance of monetary bodies on Cryptocurrency is increasingly changing from being antagonistic to cooperative. With the phenomenon of Cryptocurrency gaining momentum, financial authorities have started recognizing it formally and introducing legislations to govern it. It is becoming more favorable by the day. Banks, as well as monetary authorities, are now actively considering and exploring how to use blockchain in improving their internal processes.
As the expansion of blockchain technologies and cryptocurrencies deepens, it is hard to ignore the role of these financial tools in all industries. The idea behind the creation of cryptocurrency was in essence to eradicate the need for centralized, government-declared transactions overseen by banks. Its method employs a decentralized database recording transactions that anyone can access and alter.
The stance of monetary bodies on Cryptocurrency As the craze for cryptocurrency is gaining pace, the need for regulation has also been acknowledged by authorities. From the country level to international level, regulatory moves are being seen. Though the demand for regulating cryptocurrency has been more from people and investors, from government and banking sector there has been an increasing clamor for a legislation to get this unregulated industry in check.
The central banks/ authorities of China and Russia have already banned the use of cryptocurrency on its territory. However, India has been playing a catch-up game with Japan as it still remains unclear what stand will the country take with regard to cryptocurrencies. It seems likely that they would decide the fate after a meeting scheduled on the 12th of December 2017. Several African nations such as Zimbabwe have also come out in favor of regulating cryptocurrency but have not taken any action as yet.
There is an increasing acceptance of the fact that cryptocurrencies pose serious risks to the existing financial system and can be used for illegal transactions and money laundering. They also facilitate anonymous transactions which provides a fertile ground for crypto-criminals. On top of that, there is no effective method to track these transactions.
Challenges Posed by The Crypto Ecosystem on Monetary Bodies
There’s a storm brewing in the world of cryptocurrency. Will Bitcoin, Ethereum and other altcoins weather this cryptocurrency storm? It’s tough to say as regulatory measures are being taken all over the globe. However, far more than regulatory concerns threaten the crypto economy — there are internal problems inside the cryptocurrency ecosystem that must be addressed.
The crypto ecosystem has presented many challenges to monetary bodies. As a global economic system, cryptocurrencies threaten the authority of a central body. Cryptocurrency’s ability to be anonymous challenges the existing money transfer procedures. The nature by which crypto is transferred tends to make its transfer fee zero and the cost of communication near zero.
The Government and Monetary Bodies Are Concerned About Bitcoin
It remains to be seen if the state- and regulation-free world anticipated by Bitcoin supporters can come to fruition. Meanwhile, governments throughout the world are attempting to comprehend the impact that cryptocurrencies may have on their economy in the near future. They are specifically concerned with the three issues raised by Bitcoin in its current form.
Bitcoin is capable of evading capital constraints imposed by Monetary Bodies.
Governments frequently impose capital restrictions to prevent a currency’s value from depreciating as a result of exports. For some, this is another kind of government control over economic and budgetary policy. In such cases, bitcoin’s state-less nature comes in useful for avoiding capital regulations and exporting wealth.
One of the more well-known cases of Bitcoin-based wealth flight occurred in China. Citizens of the nation can only buy foreign money up to $50,000 per year. According to a Chainalysis research, more than $50 billion flowed from China-based bitcoin wallets to wallets in other countries in 2020, implying that Chinese citizens changed local money to Bitcoin and transported it across borders to avoid government oversight.
Bitcoin has been linked to illicit conduct.
The ability to circumvent a country’s established financial infrastructure is a blessing in disguise for criminals since it allows them to conceal their involvement in such crimes. The Bitcoin network is pseudonymous, which means that users are only recognized by their network addresses. It is impossible to determine the origin of a transaction or the identity of a person or organization behind an address. Aside from that, the algorithmic trust created by Bitcoin’s network eliminates the need for trusted contacts on either end of an illicit transaction.
Not surprise, thieves like Bitcoin as a means of facilitating financial transactions. The Silk Road case is the most well-known example of a bitcoin-related crime. In a nutshell, Silk Road was a Dark Web bazaar for firearms and illegal narcotics, among other things. Users might pay using bitcoins. The bitcoin was held in escrow until the customer acknowledged receipt of the items.
Because the persons involved in the transaction only had blockchain addresses as identity, law enforcement found it impossible to track them down. However, the FBI was eventually able to take down the site and seize 174,000 BTC. Hackers have recently been interested in infecting popular programs with ransomware and demanding payment in bitcoin. The 2021 Colonial Pipeline breach, which caused power outages in several states, illustrated the extent to which such hacks may become national security threats.
Bitcoin is unregulated.
Governments across the world are still attempting to find out how to regulate Bitcoin more than a decade after it was introduced. The issue of bitcoin regulation has several aspects. For example, shifting narratives about Bitcoin’s utility have complicated problems regarding the ideal government body to monitor the cryptocurrency, terminology to be utilized in lawmaking, and even the technique to law creation.
Is Bitcoin a money to be utilized in everyday transactions or a store of value primarily for investment purposes? Is Bitcoin a safe haven asset in times of global economic upheaval? Neither the so-called Bitcoin expert nor the ordinary bitcoin investor appears to be aware of this.
It may be claimed that the usage of Bitcoin in investment products such as futures demonstrates its appeal to traders. The underlying markets for such derivatives, however, remain uncontrolled since none of the major cryptocurrency exchanges, which are used to establish Bitcoin’s price for futures markets, are registered with the Securities and Exchange Commission (SEC).
An Impenetrable Ecosystem
While Bitcoin has the potential to upend the existing financial ecosystem’s established patterns, it is nonetheless afflicted by a number of issues. Government skepticism towards cryptocurrencies can be related to both fear and a lack of clarity about its ecosystem. These latter worries are not unfounded.
The cause-and-effect link between Bitcoin pricing and world trends is poorly understood. Given the cryptocurrency’s frequent price changes, this is a significant sticking point. Numerous frauds have plagued its growth as an asset class. The SEC stated in a January 2018 letter that there are various difficulties with cryptocurrency exchanges, ranging from a lack of transparency to the presence of bitcoin whales.
Final Thoughts On the Stance of Monetary Bodies on Cryptocurrency
In the cryptocurrency market, there has been a lot of disputes between security and utility tokens and the question whether they are commodities or currencies. The SEC plans to protect investors in this era of technological innovation, and wants to decide which cryptocurrencies are securities and which are not. The case of Howey Co.is always applied to determine whether the cryptocurrency is a security or not. In the case, the U.S. Supreme Court finally decided that Howey offered an investment contract to its shareholders, rather than selling them real estate and therefore fell within the definition of security under federal law.
At present, only 15 states in America support cryptocurrency related activities with legislative services while others leave it unregulated as they take a wait-and-see attitude towards its regulatory laws. Furthermore, although Japan and South Korea have made efforts to establish regulatory templates for ICOs, banks in many countries have begun refusing customers who use credit cards to purchase cryptocurrencies due to the fear of chargebacks.
Monetary bodies are growing in their acceptance of Cryptocurrency as a payment form that addresses the challenges of managing fiat currencies. While the operation of virtual currency schemes has come under criticism, the underlying blockchain technology appears to have real potential for improving security and transparency in supply chains and other areas where trust is a critical factor.
The stance of monetary bodies on Cryptocurrency transactions has become increasingly progressive. The main reason for this is the increase in demand for convenient and anonymous e-commerce with lower commission rates. The appeal of trading in cryptocurrencies is associated primarily with the current volatility of government fiat currencies, as well as the desire of online businesses to attract more customers by reducing their operational costs.
In conclusion, Cryptocurrency continues to increase each and every year. There is no doubt that we are looking forward to a bright future together with Cryptocurrency. While this is taking place- we feel the urgency of the matter at hand, and the need to maintain a strong relationship in order to avoid any sort of interference of legal matters, as well as payments related issues. You can feel safe knowing that Paytomat is working closely with various regulators in order to become one of the safest ways when it comes to cryptocurrency transactions. Moreover, because our aim from the start has been and will continue to be relevant and important for us as a company, there is much more in store for you, our valued customer.