Cryptos get crawling in Elon-Don times
Cryptocurrencies are on a roll in anticipation of Donald Trump easing up on their regulation. The US has been the most proactive in law enforcement against fraud and money laundering engineered through cryptos. This, despite a regulatory framework that doesn't push hard to separate transaction and speculative elements of digital currency.
Consensus is shaping up among countries over denying cryptos status as legal tender but allowing them to serve as a financial instrument. Some form of licensing of crypto issuers and intermediaries, and disclosure requirements should emerge from an international regulatory response to digital currencies.
If the US were to weaken coordinated steps to bring order into the crypto market, other countries may have to harden a spectrum of responses. These could range from outright bans to active support for blockchain users.
Regulation within the US has been fluid, with various agencies regarding digital assets as securities, commodities and property. If new US rules were to widen the economic footprint of cryptos, it may lead to more regulation through enforcement, certainly not a desirable outcome. There could be debate over the degree of regulation.
But opaqueness and complexity would lead to weaker oversight. The right amount of oversight should ideally improve investor protection, deter illegal activity and encourage adoption. The trouble is, no country has a fair idea of the right amount.
Yet, there is a fairly consistent acceptance of the risks a poorly regulated crypto market poses to law enforcement and financial stability.
