During the last decade, we have seen a real evolution in the adoption of cryptocurrencies by the general public as alternative forms of payment, a safe-haven asset, and investment tools.
After the launch and success of cryptos like Bitcoin, Litecoin, Ethereum, other cryptocurrencies quickly followed. And more recently, there has been the Dogecoin, created as a joke, which is taking a prominent place thanks partly to Elon Musk’s impetus.
Here is a recap of the current situation regarding policies dealing with cryptocurrency issues around the world.
The increased interests of institutions and private companies in cryptocurrencies
The monetary question has been the core economic problem for hundreds of years. Over the last decades, several important developments in the financial sector took place. And now the Blockchain is not only pursuing but also leading the main trends.
Crypto technology is not just limited to Fintechs. Old and traditional financial services companies, such as Goldman Sachs and JPMorgan, as well as tech giants like Facebook, have taken note and are in the process of developing their own cryptocurrencies.
Therefore, the question of cryptocurrency regulations is quite complex since the subject of the development of institutional cryptocurrencies raises questions of sovereignty.
Suppose each country is free to choose the currency of its choice, for example. In that case, there is a loss of effectiveness of monetary and fiscal policies. And also a big question of authority and acceptance of the means of exchange. Hence the interest was shown by certain institutions in this type of asset.
Central bankers are waking up.
The cryptocurrency phenomenon has grown too large, but above all, it escapes any real control. Its entry into the real economy, like the use of Bitcoin at Tesla, begins to raise many questions. Especially in terms of traceability and monitoring of financing networks.
While Euro Digital is still not ready for release, nothing yet for a few years. Bankers are starting to worry about the hold of cryptocurrencies in the financial markets. It’s high time to regulate. From now on, every crypto broker will therefore be subject to increasingly restrictive regulations.
What is the prospect for the crypto sector?
Cryptocurrencies are becoming more and more essential, and many governments have become aware of that.
In El Salvador, the president said recognition of Bitcoin would generate short-term jobs. Also, it could help better the inclusion of thousands of people who are outside the system and boost investment in his country. It will therefore be important to observe the effects of this law in the country.
The potential of crypto-currencies is confronted with the centralization of powers (political, monetary, or legal). Therefore, the industry is in real search of a balance that will probably be achieved over several years. A significant factor to consider is the global nature of cryptocurrencies, which can encourage harmonized regulations over time, depending on the country.
Either way, whether we view cryptos as currencies or as digital assets, governments should not continue to ignore them and only restrict them but rather find appropriate regulatory frameworks.