International cryptocurrency regulations will create win-win situations

the background

Initial coin offerings on blockchain platforms have painted the world red for tech startups around the world. A decentralized network that can allocate tokens to users who support an idea with money is both revolutionary and rewarding.

Profitable Bitcoin turned out to be an “asset” for early investors, generating multiple returns in 2017. Investors and cryptocurrency exchanges around the world capitalized on the opportunity to write huge returns for themselves, leading to the rise of many online exchanges. Other cryptocurrencies such as Ethereum, Ripple and other ICOs promised even better results. (Ethereum grew more than 88 times in 2017).

While ICOs got millions of dollars in the hands of startups within days, the ruling governments initially decided to follow the fastest ever fintech development, which had the potential to raise millions of dollars in a very short period of time.

Countries all over the world are considering regulating cryptocurrencies

But regulators have been cautious as the technology and the effects behind it have gained popularity as ICOs began to raise billions of dollars — that too on proposed plans written in white papers.

It was in late 2017 that governments around the world seized the opportunity to intervene. While China banned cryptocurrencies altogether, the SEC (Securities and Exchange Commission) in the US highlighted the risks to vulnerable investors and suggested treating them as securities.

SEC Chairman Jay Clayton’s latest cautionary statement, issued in December, cautioned investors, stating:


“Please also recognize that these markets span national borders and that significant trading may occur on systems and platforms outside of the United States. The funds you invest can quickly travel abroad without your knowledge. As a result, risks may increase, including that market risk. regulators such as the SEC may not be able to effectively prosecute bad actors or recover funds.”

This was followed by concerns from India, where in February Finance Minister Arun Jaitley said that India does not recognize cryptocurrencies.

In a circular issued by the Central Bank of India to other banks on April 6, 2018, banks were asked to sever ties with companies and exchanges engaged in trading or dealing in cryptocurrencies.

In Britain, the FCA (Financial Conduct Authority) announced in March that it had formed a cryptocurrency task force and would receive support from the Bank of England to regulate the cryptocurrency sector.

Different laws, tax structures in different nations

Cryptocurrencies are basically coins or tokens that have been launched on a cryptographic network and can be traded around the world. Although cryptocurrencies have more or less the same value around the world, countries with different laws and regulations can produce different returns for investors who may be nationals of different countries.

Different laws for investors in different countries will make calculating returns a tedious and difficult task.

This will involve investing time, resources and strategies that will cause unnecessary length of processes.

The solution

Instead of many countries developing different laws for global cryptocurrencies, there should be a single global regulatory body with laws that apply across borders. Such a move will play an important role in expanding the legal trading of cryptocurrencies worldwide.

Globally focused organizations like the United Nations (UN), World Trade Organization (WTO), World Economic Forum (WEF), International Trade Organization (ITO) are already playing an important role in bringing the world together on various fronts.

Cryptocurrencies were formed with the basic idea of ​​transferring funds around the world. They have more or less similar value in the exchanges, except for the minor arbitrage.

A global regulatory body governing cryptocurrencies worldwide is the need of the hour and can set global rules to regulate the newest mode of financing. At the moment, each country is trying to regulate virtual currencies through legislation, the development of which is in progress.

If the economic superpowers with other countries can build a consensus to introduce a regulatory body with laws that do not recognize national borders, it will be one of the biggest advances in designing a crypto-friendly world and promoting the use of one of the most transparent fintechs. system ever – blockchain.

The general regulation, which consists of subsections related to cryptocurrency trading, refunds, taxes, penalties, KYC procedures, exchange-related laws and punishment for illegal hackers, can give us the following: advantages.

  1. It can make profit calculation much easier for investors worldwide as there will be no difference in net profit due to uniform tax structures.

  2. Countries around the world can agree to share a portion of profits as taxes. Therefore, countries’ share of taxes collected will be uniform across the globe.

  3. The time involved in setting up multiple committees, drafting bills, followed by debates in the legislative arena (such as the Indian Parliament and the US Senate) can be saved.

  4. You don’t have to go through each country’s strict tax laws. Especially those involved in multinational trade.

  5. Even companies offering tokens or ICOs will comply with said “international law”. Therefore, calculating post-tax earnings will be a piece of cake for companies

  6. Globalization will require more companies to come up with better ideas, thereby increasing job opportunities around the world.

  7. The law may be assisted by an international watchdog or global currency regulator, which may have the power to blacklist an ICO offering that does not comply with the norms.

That’s not all the benefits when it comes to a law that will regulate cryptocurrencies worldwide. There are certain disadvantages also.

Getting the world’s financial leaders to come together and craft legislation can take time. Discussions and bringing them to consensus can be difficult

  1. Countries or economies that provide tax-free structures may not agree to adopt a law that provides for a universal tax policy;

  2. A global watchdog or regulatory intervention in monitoring ICO-related regulatory developments may not go down well with some countries.

  3. Universal law can cause the world to divide into factions. Countries that do not support cryptocurrency, such as China, may not be part of it.

  4. The law may be the brainchild of economically strong states, who can craft it to suit their best interests.

  5. This law will be centralized by having a global regulatory body unlike cryptocurrencies which are decentralized in nature.

Conclusion

The world is better together. Whether it’s creating a peaceful world after World War II or getting better trade laws and treaties.

The International Trade Organization (ITO), the World Trade Organization and the World Economic Forum have some of the best minds defining the global economy.

They can come together and be part of a body that will define the world’s economic prosperity. They will help develop global cryptocurrency norms and can be part of a regulatory body that will better serve as a guide and beacon for thousands of ICOs around the world. It may take time at first, but it will get easier in the times to come.