In the series „The 10 biggest myths about crypto currencies“ we would like to take a closer look at the 10 most common claims concerning crypto currencies and their chances and risks. We will daily a new myth vorknöpfen and check this for correctness.
A regulated trade with the Bitcoin secret is not possible
The regulation of the Bitcoin secret has developed into one of the central, if not the central topic in the area of blockchain, especially in the course of the last six months. As a reaction to the increasing popularity of Bitcoin secret crypto currencies on the one hand and the new crypto currencies created by countless ICOs on the other, more and more countries around the globe are currently being urged to think about regulatory measures and create framework conditions for this growing sector.
A crypto currency as a non-physical, decentrally organized digital currency naturally poses challenges to central banks and financial market regulators all over the world. Especially under many legal aspects, the emergence of crypto currencies creates precedents that cannot be easily integrated into the existing legal framework.
The second part of this series already wrote about the different handling of the regulation of crypto currencies. If one refrains from radical measures of crypto-regulation, above all practised in China, the majority of constructive approaches on the part of the state can indeed be discerned.
In the course of this, some of the crypto exchanges operating in Japan were closed
Japan, for example, can be named as one of the most brilliant examples at this point. At the beginning of October, a broad-based regulatory action was launched to implement a law to regulate digital currency exchanges. Rules were enacted to prevent crypto currencies and their trading on stock exchanges from being misused for money laundering and thus involved in criminal activities. In addition, the Know Your Customer Principle (KYC) has set a standard that is subject to an annual audit. The same law had also officially declared Bitcoin legal tender in Japan at that time.
However, those providers who were able to meet the requirements demanded by the Japanese government were provided with official state licenses. Such a regulatory solution can have a decisive long-term effect on the acceptance of crypto currencies and – despite partial restrictions – even contribute to their further growth. A clearly defined set of rules that sets a framework for trading in crypto currencies is a basic prerequisite for mainstream adaptation. Without the necessary legal certainty and consumer protection, it will be difficult to convince broad sections of society and traditional companies of crypto currencies.
It remains to be seen that regulated trade in crypto currencies is possible – it is already happening in Japan. The successes there prove the system right: Japan has risen (following the ban on crypto exchanges in China) to become the world’s largest market for trading in crypto currencies. In view of this development, it seems only a matter of time before similar laws are also applied in Europe.