There are millions of rumors that are spreading in the market related to cryptocurrency. But can crypto technology be regulated by the government?
Hardline cryptocurrency supporters and mainstream investors alike have been debating a subject that has arisen: how can the government control Bitcoin and its alternatives? To begin to answer this question, we must first recognize that Bitcoin and the vast majority of other ICO-issued tokens are, in fact, decentralized.
What exactly does this imply? Put another way, the supply of cryptocurrency tokens is not controlled by a central authority or governmental entity. It also has anything to do with cryptocurrencies as a means of trade. No third party may intervene in the conduct of transactions carried out, validated, and recorded in a public ledger when they are carried out utilizing the blockchain.
China has taken the most aggressive position in the mining industry, shutting down exchanges in their nation and escorting miners out through land-use restrictions. Of course, this has had no impact on the price of cryptocurrencies or the speculative bubble accompanying them.
The difficulty in regulating Bitcoin and other cryptocurrencies stems from the fact that they are conducted through a peer-to-peer network. While governments have been successful in policing online marketplaces such as The Pirate Bay and Silk Road, there are a plethora of cryptocurrencies to contend with. The primary distinction between cryptocurrencies and traditional currencies is that transactions may be carried out via exchanges or directly through your coin wallet.
However, this does not imply that the government is powerless in the face of cryptocurrency legislation, or does it?
Can the government regulate crypto technology?
The most effective approach for the government controlling cryptocurrencies is to tax any fiat money used to cash out a virtual token. This is the most common method of government regulation. With that said, the primary limitation is that this would only apply to specific tickets, and a cryptocurrency owner could easily switch to another coin to pay out their holdings. In addition to being proponents of cryptocurrency, many early adopters and hardliners prefer it as a means of exchange for essential goods and services over conventional fiat currencies.
The SEC regulates investing in cryptocurrencies, while the CTFC investigates interstate commerce offenses. The IRS also holds cryptocurrencies, making them subject to either an income or a capital gains tax, depending on their value.
The SEC has authorized two Bitcoin futures exchange-traded funds (ETFs), one for the CBOE and one for the CME. At this moment, no further futures exchange-traded funds (ETFs) have been issued, despite the large number of applications that have been received.
The SEC now has the most regulatory power in the crypto industry about initial coin offerings (ICOs). It recently suspended its initial coin offering (ICO) after it was engaged in fraudulent activities.
Additionally, the CTFC recently subpoenaed major cryptocurrency exchanges Bitfinex and Tether after the latter failed to authenticate the existence of over $2.3 billion in reserves. Bitcoin prices fell by 10% for a brief period due to this.
Much of the proposed legislation being considered throughout the globe is based on concerns about a potentially hazardous speculative bubble, which many believe might hurt the country if bitcoin commodities plummet in value.
Pros and Cons Decentralized Cryptocurrency
Is cryptocurrency a safe investment or a wildfire because of the absence of government regulation? Consider some of the benefits that decentralized cryptocurrencies have to offer, shall we?
- Transactions are irreversible and cannot be forged or counterfeited.
- Users preserve their anonymity until they payout or swap their tokens, which they may do via online go URL platforms.
- Most currencies have a fixed supply, which will help keep inflation under control when additional mining money becomes more difficult.
- Smart contracts allow investors to perform transactions without the involvement of a third party.
- Transaction costs are lower than those charged by credit cards and most other financial instruments.
- In contrast to investing in a stock, investing in a token requires no documentation.
- Consumers will have more options as a result of increased competition.
- To reward specific rights or merit inside blockchain applications and other blockchain functions, currencies may be issued (not exclusively as a store of value)
- Access to new tokens is granted to everyone.
The most severe flaw in present monetary policy is that the federal government arbitrarily sets national interest rates, and creditors have no vested interest in regulating the money supply. To be sure, Bitcoin and other cryptocurrencies are not necessarily the silver bullet we’ve been searching for, at least not just yet!