Why Many Countries Want To Tax And Regulate Cryptocurrencies? | UseTheBitcoin
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Why Many Countries Want To Tax And Regulate Cryptocurrencies?

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Carlos is an international relations' analyst specializing in cryptocurrencies and blockchain technology. Since 2017, Carlos has written extensively for UseTheBitcoin and other leading cryptocurrency sites; with over 2,000 articles published.

Cryptocurrency is the future of finance. We know this by now, as there are so many users of crypto and a maximum of them are doing profit. Visit Crypto Cash Website if even you want to be a part of this ecosystem. But in order to make it a habit we have to raise the debate and enforce responsible and reasonable relation towards using cryptocurrencies. Even the most devoted followers of cryptocurrency who just want to encounter the success of cryptocurrency will be looking forward to some kind of safety, security, reliable and fair means of market conditions.

Currently, the regulatory environment is quite fragmented and uncertain. However, the recent development point otherwise, where we can see a turning point nearing us. The regulatory bodies have settled down and are drafting frameworks to fit cryptocurrency within; we should welcome these changes as we move forward.

Why are the countries regulating and taxing cryptocurrencies?

The International Monetary Fund (IMF) on July 15, released a riveting document with a useful digital currency typology stating the risks that come along and the policy recommendations. This submits to the stablecoins issues privately impose multiple risks to the users and financial stability. This took an account of default risk, liquidity risk, foreign exchange risk, and market risk being the prime concerns at the moment.

This report further states that cryptocurrencies and online assets can be attractive. This will disrupt the capital inflows affecting the fiat currencies resulting in weak institutions and high inflation rates. It also states that it will be difficult for the virtual asset service providers (VASPs), like the crypto exchanges, to abide by Anti-Money Laundering (AML). Not only that, but it will also face a hard time fighting the Financing of Terrorism (CFT) regulations on the event of assets being held up by technology i.e. decentralized while the stakeholders are also present in the jurisdiction.

On the other hand, there are some solutions you can cling to. The central Banks can play a part in distributing stablecoins to the issuers. They will do this by taking an account of this to the central reserve and avoid monopolies. The monopoly can be directed by forming and protecting monetary policies. These banks can consider issuing their own currencies as they proceed. This is actually is in action in China. In order to draw motivate the private sector, the IMF in their document instead calls for public-private partnerships.

The Internal and External Factors

Libra is a persistent case that as to be addressed when it comes to the pressure created by successful companies. When Facebook first appealed for a step being taken on cryptocurrencies, it was grilled in U.S. Congress. The proposal was not accepted then, but now we see the potential of that debate being raised in front of the government. And why not, a tech giant with over a 2.4 billion user base and supporters like PayPal, Visa, MasterCard, looks to enter the debate, it, must have some significance.

Libra has made sure to stretch the debate on what the government will do towards the phenomenon known as cryptocurrency. This action that Facebook took pushed the crypto ecosystem at least three years down the future, according to Bitwise.

The U.S. Republican Senator Mike Crapo said that Facebook’s Libra project has boosted the interest in online currencies and blockchain. He also mentioned that once it is regulated appropriately, the online currencies and the technology that designs it will bring “meaningful benefits”.

Although, Facebook had created a fair amount of uproar few over companies can add up to this debate. The traditional finance market participants such as JPMorgan Chase, Fidelity Digital Assets Services, and Goldman Sachs have increased their involvement in this industry. This especially can be taken into account for an investment survey by Fidelity. This survey showed that foggy regulation is one of the biggest hardship of putting off organizational investors from increasing their crypto portfolio.

Apart from these external factors, a similar wave has been observed in this sector itself. It can be called as the new-gen of crypto and online asset exchange, which has been designed to collaborate with the traditional operators of exchange.

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