There is no denying that cryptocurrency and blockchain technology has gone mainstream. If you will think of it, there are 1368 altcoins in circulation as of December 20, 2017. And expect this number to still grow considering the popularity of Bitcoin and other digital currencies.
After Bitcoin almost reached $20,000 around mid-December in 2017, a good number of regulators from different countries decided to step in and do something about the crypto market. The crypto market usually falls under a grey area in terms of regulations in different parts of the world. And with the threat of regulatory changes, we’ve seen Bitcoin depreciate in value even below $6,000 at one point.
Cryptocurrency Regulatory Changes in Asia
China was among the first countries that made an impact by regulating cryptocurrencies. In September 2017, China banned ICOs from operating in the country. But this was just the start of their regulatory changes.
Earlier in February, China’s central regulatory authority, The People’s Bank of China (PBOC) announced that “it would block access to all domestic and foreign cryptocurrency exchanges and ICO websites”.
South Korea is also another country that caused panic among cryptocurrency investors. South Korea launched a real-name trading system for crypto transactions by the end of January in its attempt to curb money laundering activities. The government even had a stance of potentially shutting down local virtual currency exchanges in the country.
The good news is that the South Korea backpedalled from their previous plan and decided to support “normalization” of cryptocurrencies rather than implementing strict regulations.
Regulatory Changes Within The United States
Compared to its Asian counterpart, the United States has a somewhat milder approach on cryptocurrencies. For taxation purpose, the IRS has ruled that Bitcoin, as well as other cryptocurrencies, are viewed not as a currency but rather as a property. This means that investors will have to keep account of their gains and pay the appropriate taxes. In addition to this, both short-term and long-term capital gains and losses must be filed.
Countries Embracing Blockchain Tech
Despite the growing number of regulations on cryptocurrencies, there are countries that are exploring the possibilities of blockchain technology. According to a report drafted by Ahmet Kenan Tanrikulu, the deputy chair of Turkey’s Nationalist Movement Party, he has drafted a proposal for a state-backed cryptocurrency that is called the “Turkcoin”.
Though technical specifics of this cryptocurrency remain unclear at this point, the goal is to minimize the current risks presented by cryptocurrencies. In the report, the asset basket would include some of the wealthiest companies in Turkey including the Istanbul Stock Exchange and Turk Telekom.
Venezuela is another country that has embraced the possibilities of blockchain technology. Venezuela has launched a pre-sale of their oil-backed cryptocurrency recently. Nicolas Maduro hopes that the digital currency will help the country transact despite sanctions initiated by both the US and the European Union.
Venezuela’s Petro is going to be backed by oil, gas, gold, as well as diamond reserves. It can also potentially draw investments from countries such as Qatar, Turkey and even European countries.
Another reason for initiating a state-backed cryptocurrency for Venezuela is due to the hyperinflation that their hard currency has experienced. Though there are doubts about its potential benefits, it is undoubtedly a bold step towards considering the potential benefits of blockchain technology.
A Regulator’s World
It seems that 2018 is the year that regulators need to decide about their approach when it comes to digital currencies. At the end of the day, it seems that they still have the final say whether or not to adopt cryptocurrencies. And up until now, there is no general consensus worldwide how to treat digital currencies.