Crypto Companies Give Up Struggling Governments. What’s In Store For Industry?
Since the moment the industry was born we could observe continuous can-and-mouse game between watchdogs and cryptocurrency companies. Though unwilling initially, crypto companies tend to express more interest in collaborating with governments.
For instance, in the US crypto companies start cooperating with regulators. The two of the country’s largest crypto companies Coinbase and Circle have declared recently their plans to launch licensed crypto assets trading.
Circle supported by Goldman Sachs has announced it plans to get federal license for banks in attempt to enlarge the range of services offered. The company also wants continue registering as broker and trade platform in the US Securities and Exchange Commission (SEC).
The same decision was taken by Coinbase that declared the plans in its blog. The company filed application to SEC as regulated broker dealer.
Coinbase acquired three companies, Keystone Capital Corp., Venovate Marketplace Inc. and Digital Wealth LLC with the view to offer services like crypto asset trading, margin and over-the-counter trading (OTC). Of course, these steps are still to be approved by SEC.
The willingness of institutions to collaborate seems to be mutual. The US authorities also softened their stand about businesses engaged with cryptocurrencies.
While regulators tended to keep away from cryptocurrencies, the focus has shifted to scam and illegal enterprises in the industry. For instance, SEC is aimed at scam companies and ICO in particular.
Although SEC does not want to alter the regulations for cryptocurrencies and ICO, the agency is not likely to have troubles with them as long as they stick to the existing rules.
“If you have an ICO or a stock, and you want to sell it in a private placement, follow the private placement rules. If you want to do any IPO with a token, come see us. The SEC is happy to help you do that public offering if issuers take the responsibility SEC laws require,” SEC Chairman Jay Clayton said.
As this regulatory issue gets clarified in the US, even major Wall Street players who used to criticize cryptocurrencies now enter the market. New York Stock Exchange (NYSE), Nasdaq, Goldman Sachs, JP Morgan – all of them have announced lately their future crypto projects. Technological giants like Facebook, Google and IBM don’t want to lag behind.
While problems with regulation (in Asian countries in particular) have made crypto exchanges seeking shelter in regions like Malta with more favorable legislation for blockchain companies, other exchanges have found ways to adapt to new rules and register offices in the countries they plan to have business in.
The largest crypto exchanges including Bitfinex, Poloniex (acquired recently by Circle), Bithumb and Bittrex have toughened their KYC (know your customer) and AML (anti money laundering) procedures to stick to the rules. Lately Bittrex has contacted a bank in the US and offered crypto trading for USD.
In April Singapore’s global crypto exchange Huobi declared expanding to Europe as it did so in Asia and the US before.
“We are not afraid of regulation nor are we escaping regulation. Not Malta, not Switzerland. Absolutely London, more precisely Britain, is the entry point for the European market for us”, said Huobi Group’s Vice President Peng Hu.
South Korea and Japan tightened the screws especially for crypto exchanges but at the same time they were elaborating rules for crypto platforms to operate in the legal framework. Korea’s authorities have inspected lately local exchanges to check compliance with KYC/AML laws.
In India people supposed, businesses engaged in cryptocurrencies would have to leave the country by the RBI guidelines that forbids banks to deal with any digital asset. This scenario is unlikely as India’s government is already considering taxation for crypto trading rather than complete ban.
Crypto industry and regulators begin collaborating around the world. The only country that does not fit in is China that is more interested in blockchain rather than cryptocurrencies. although the concept of cryptocurrency has always been about decentralization and independence from authorities, now these businesses will have to be receptive to governments to stay afloat.
Some people assert, mandatory rules are going to make it more structured and customers will find it easier to make safe financial investments. But not all share this view. Bitcoin supporter Andreas M. Antonopoulos states, cryptocurrencies cannot be regulated by any means:
“The question is not whether Bitcoin should be regulated, but whether it can be regulated. The reality is “No.” The rest is nostalgia. Appeal to authority is the old way, not Bitcoin.
He may well be right. But given 1,600 cryptocurrencies existing today, avoiding regulation does not seem to be a viable option, especially with the view of continuously growing scam in the industry. Establishing legislation to stimulate business growth and provide customer protection is complicated yet necessary challenge we cannot ignore.