Cryptocurrencies have become widespread in many countries around the world. They are decentralized, distributed, open-source, peer-to-peer digital currencies based on mathematical principles. Such currencies have no central administrator and no central oversight or control. They can meet today's increasing demands, in particular:
Zero transaction fee;
Possibility of instant settlements;
The high degree of transaction security;
Anonymity;
Irrevocability of payments, etc.
Considering the above, it is not surprising that many people today swap ETH to XMR and other coins. Such exchanges are completely anonymous and can bring benefits. But what if the cryptocurrency is subject to strict regulation? What will be the changes? Let's take a closer look at this issue to find out if crypto regulation is needed at all.
What Causes the Need to Regulate Crypto at the Modern Stage?
Many crypto experts note that the circulation of cryptocurrencies requires forming a system of state regulators. This is due to the risks associated with its use both at the user and the state level.
Risks of Digital Coins for Crypto Investors
The main risks in the use of crypto by ordinary users include the following:
Possibility of loss of funds due to theft. For example, as a result of cyber attacks on a cryptocurrency exchange platform;
No guarantees regarding the return of funds invested in cryptocurrencies;
Possibility of fraud;
The difficulty of using conventional methods of assessing the market value of crypto assets;
Significant price fluctuations of cryptocurrencies and related risks.
Crypto risks are increased for investors who choose cryptocurrencies without any preliminary analysis. The choice must be treated responsibly. Do it in line with LetsExchange main values, and you can succeed!
Risks of Cryptocurrency at the State Level
Among the risks for the state associated with the active distribution of cryptocurrency are the following:
The possibility of using digital currencies for illegal transactions. This follows from the anonymity of cryptocurrency. Its consequence is the impossibility of tracking the participants of such operations, which creates favorable conditions for committing illegal acts;
The loss of the state's monopoly on the emission of money. As a result, the decrease in income received from the issuance of money by central banks;
Decrease in demand for the national currency. This may cause its devaluation and change in the speed of circulation, which will complicate the process of monetary regulation;
The impossibility of conducting monetary policy. A significant part of the money supply will be out of control.
What Issues Can Cryptocurrency Regulation Solve?
The lack of control over the use of cryptocurrency makes it impossible to track funds used to finance terrorist organizations. This, in turn, guarantees impunity for criminal acts. In cases of cryptocurrency fraud, it is not possible to identify a person, as this system guarantees complete anonymity. Therefore, cryptocurrency becomes the basis of the shadow sector of the economy. It can have far-reaching adverse consequences in the future. Giving digital currency a specific legal status makes controlling and limiting its circulation possible.
Possible Forms of Crypto Regulation
There are two possible forms of legal regulation of digital currency circulation:
Making certain changes to modern legislation. Legislation on licensing certain types of activities, the payment system, and tax legislation will require revision;
Preparation of a specialized law on the fundamentals of cryptocurrency regulation. Such a law should describe the principles of regulation. It should also define measures to counter the use of cryptocurrency for criminal purposes.
Conclusion
The financial and legal essence of digital currencies still does not have an unambiguous definition. Security risks determine this situation. So, there is a need to regulate the crypto market, which will help solve the problem.
