Some commentators believe that cryptocurrencies provide a new
way for criminal organizations to commit fraud, money laundering, and a host of
other financial crimes. This criticism is based on the ability of
cryptocurrency traders to remain completely anonymous. Indeed, cryptocurrencies
are used for "dark markets," where criminals can buy and sell illegal
goods with little chance of being identified. In fact, various government
agencies have called drug dealers who exchange drugs for cryptocurrency the
"new generation of criminals."
Data theft and financial fraud are
additional current legal issues related to cryptocurrencies. The promise of
blockchain's anonymity and its seeming freedom from regulation may encourage
many users engaged in illegal activities to use cryptocurrencies for their
financial transactions. The aforementioned legal challenges facing
cryptocurrencies are likely to become even more pronounced as no intermediary
or authority has exclusive jurisdiction to resolve cryptocurrency-related
disputes. For example, in a traditional financial transaction, if a party
claims that its account credentials were stolen and money was transferred from
its account fraudulently, its financial institution (e.g., a bank) can mediate
and resolve the matter. However, if a similar situation arises on a blockchain
platform, there is no mechanism to resolve such a dispute because
cryptocurrency is decentralized and does not have financial institutions acting
as intermediaries. Accordingly, victims of cryptocurrency theft are likely to
have no legal way to recover their losses.
Malik (2018) argues that while
cryptocurrency can provide financial empowerment, reducing corruption risk,
criminals can also use these technologies to their advantage. Public interest
in cryptocurrencies, such as Bitcoin and Ethereum, has increased dramatically
recently as many industries explore ways to benefit from the new technology. As
public interest grows, new uses for cryptocurrencies emerge almost every day.
As new uses of cryptocurrency emerge, so does its potential legal liability. In
this article, we will look at some common legal issues related to
cryptocurrencies.
With bitcoin's sudden rise in value,
the biggest challenge for regulators is ruling out its use for online fraud,
money laundering and terrorism. Although critics argue that these problems are
legitimate, the government is somehow trying to develop guidelines designed to
regulate cryptocurrencies. They are most interested in the classification of
digital currencies available, as well as how to tax and regulate these
currencies.
One of the first problems with
cryptocurrency was that many initial coin offerings were fraudulent in nature.
However, as with the stock and commodities market, where there are regulators,
cryptocurrency needs an effective regulator. The lack of a regulator requires
an organized body that is thoroughly aware of the technical and economic issues
that determine bitcoin's movement.
The problem that regulators face is the
proper classification of different types of cryptocurrencies. Cryptocurrency
Exchanges, Legal, must register with the Financial Services Agency
Cryptocurrency Exchanges, must register with FinTRAC after June 1, 2020
Cryptocurrency Exchanges, Legal, must register with the Financial Intelligence
Unit.
This collective stance has led to
friction with the region's traditional banking industry, and in Chile, for
example, some banks took steps to close cryptocurrency exchange accounts in late
2018. Subsequent court rulings have protected these exchanges for now, but
clearer guidelines are clearly needed.
Cryptocurrencies are here to stay. The
future of commerce is tied to new emerging technologies that can benefit
humanity. Needless to say, users and industry participants can assess whether
cryptocurrency can benefit or harm them according to their goals and prospects
for owning it. Taking advantage of opportunities from part of the
cryptocurrency pie and blockchain technology can be beneficial to researchers.
Applying cryptocurrency to maximum benefit would then be one of the most
remarkable discoveries of the 21st century.
As cryptocurrency continues to be
legalized outside the Western world, we can expect to see increased global
investment and job creation in this field. Unregulated finance. The rapid
growth of cryptocurrencies and DeFi businesses means that billions of dollars
in transactions now take place in a relatively unregulated sector, raising
concerns about fraud, tax evasion and cybersecurity, as well as broader
financial stability. If cryptocurrencies become the dominant form of global
payments, they could limit the ability of central banks, especially in smaller
countries, to determine monetary policy by controlling the money supply.
Within a few years, cryptocurrencies
have evolved from a digital novelty to a trillion-dollar technology with the
potential to disrupt the global financial system. Bitcoin and hundreds of other
cryptocurrencies are increasingly being used as investments, used to buy
everything from software to real estate to illegal drugs.
If you want to learn more about this topic, feel free to leave your valuable comments. We are happy to assist you.
All the best for your future.
(All the material in this article are only the views of
the author, and couldn’t be taken as “Financial Advice”)
Key Words: Regulation of Cryptocurrency
Regulation of Cryptography
Regulation of Cryptocurrency around the World
Regulation of Cryptocurrency in India
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