Since the beginning years of Crypto assets, cryptocurrencies and digital assets received immense attention from investors across the world, The breakthrough also made notable adoption benchmarks. This development was a result of years of development and effort taken by crypto investors all around the world. But of the primary key-points that surge the gain of trust in them was the regulations taken across the global jurisdictions.
Popularity growth vs Trust
Over the years of growing popularity, digital currencies were established as an investment opportunity, trading vehicle, and cleared a path for an increasing renaissance of worldwide exchanges. Apart from the exchanges, an abundance of platforms to encourage digital assets and cryptocurrency investment increased across the globe. And all this was not possible without regulations. So how regulation is prompting trust here? The different approaches taken by the global jurisdictions helped shape the digital currency world to make a better place for everyone. Not surprisingly, while the blockchain-powered assets become more accessible to the mainstream population, new and developed refining laws are coming forward more frequently and, it’s aiding the trust between you and the currencies.
Every country had varied road blockers for crypto regulations.
Historically speaking, for any new development to become a standardized element of the society requires a mass scale adoption. Often we see, the mass scale adoption is often hampered by the lack of laws and regulations in jurisdiction bodies. While some countries may involve in creating a new regulatory framework, most of the countries entirely ignore or evade a new adoption. Thus makes it impossible to have an equivalent worldwide standard and enables the door for corrupt and outlaws activities.
Hendrik Henderson, a Chief Business Development Officer of PARSIQ, provides the knowledge tat “Digital assets themselves already have an intrinsic need to be regulated, as they are tied to fiat currency. Compliance needs to be taken into consideration, and this will allow for greater adoption of cryptocurrency.”
Hendrik’s observation is reasonable, as referred without steady and firmed laws imposed, the chances of corrupt bodies and malpractices increase, and that doesn’t only hinder the integrity of the currency but also the slower the mainstream adoption.
Thankfully, every year we see different laws and regulations being imposed by different international regulations, thus help to promote trust and increase the popularity of cryptocurrencies for mainstream adoption.
The United States’ Cryptocurrency Act of 2020
In early 2020, the United States introduced a bill, the Cryptocurrency Act of 2020. The bill proposed to decrypt the crypto and digital assets regulations. The latest bill attempts to solve the agitation between regulators, issuers, and investors for redefining digital assets and cryptocurrency investments.
The bill is categorized into three parts for regulating different types of regulatory bodies responsible for overseeing each type of digital asset. Presently cryptocurrency is established as a representation of US currency relying on a decentralized ledger managed by the department of the Treasury acting through the Financial Crimes Enforcement Network (FinCEN). As described on the bill, crypto-commodity is known as economic goods and services with full or partly substitutability resting on a blockchain overseen by the Commodity Futures Trading Commission (CFTC). Finally, the bill talks about the crypto-security as equity, debt, and derivative implements that sit on a blockchain governed by the Securities and Exchange Commission (SEC).
The European Union’s 5th Anti-money laundering Directive
In Jan 2020, the European Union’s signed a new law the 5th Anti-Money Laundering Directive or 5AMLD. The new legal statute will supposedly help to increase the security within European borders regarding the cryptocurrencies. The statement of 5AMLD will have a direct impact on crypto and digital assets as it marks the providers of the digital assets under the regulatory acumen.
The most prominent amendments created by the 5AMLD law on the current KYC requirements now fall under very strict terms. The amendments include mandatory monitoring of all transactions and filing of any suspicious or illicit activities. Also, the latest EU-operating changes not only require a valid proof for KYC but also stringent proofs of identity by various means.
How Regulation is prompting Trust in the Crypto Asset Industry in India?
Crypto regulations in India
In March 2020, the Supreme Court of India revoked the ban on the banks working in crypto exchanges. Supreme Court flips RBIs oppressive bans on the banks providing crypto services to the crypto startups. However, this gives the startups to breathe a new lifeline and help to redirect their resurgence in India.
Regulatory and perception are big challenges but despite all the challenges cryptocurrency in India received unbelievable success. Mainstream adoption of digital currency was a long journey in India; however, numerous obstacles overcome India starting to see the new era of light in the blockchain investment sector. The latest ruling in March has gained a new standard for credibility and thus, a large number of Indians starting to see cryptocurrency as a legitimate category of asset. With the latest verdict will help to surge the crypto usage and integrity of digital asset investment.
Laws and regulations propel trust and confidence
On an ending note, It is evident that with the growing popularity of digital assets demands the requirements for global regulations. The regulations will not only help to facilitate trust and confidence but also aids in adoption in mass scale. The CEO of Bitmart, Sheldon Xia asserted, “With a clear path of compliance and regulation, the trading platform will comply with the applicable law and regulation, and the trading platform will be more transparent. The concerns of the security of a crypto exchange will be relieved, with a more comprehensive framework of regulation, the maturity of the crypto market will also increase, which will benefit the market as a whole.”
It is only possible if more and more countries come forward and enact transparent regulations, the uprightness of digital assets will continue to grow. Thus will not only help to create a new economic sphere among the mainstream investors but also with new regulations, the investors will start to trust and built an advanced, transparent, and regulated trading platform. So anyone asks me the same question that How Regulation is prompting Trust means I will share this article for them to understand.
Writer and Researcher on Blockchain technology, Cryptocurrency, Cyber Security and etc., Graduate in Journalism and Mass Communication and currently pursuing Post graduation diploma in Marketing communication from Calcutta University. A simple person with big dreams and hopes in life. Being a Marketing Communication student, I am extremely interested in the field of Content Marketing. I love researching and learning new things that’s how I ended up working as a Content Writer.