Cryptocurrency has been the force of much attention for many countries regulators, the question in the lips of many regulators is cryptocurrency the future of global banking and trade, or a sketchy payment and investment vehicle favored by scammers and speculators, criminal organizations, and any individual or entity shut out of Western banking systems.
One thing is quite clear, the fame of cryptocurrency can be dated back to 2019, but originally started 2009, at that point Bitcoin had no real monetary value, says Mark Grabowski, an associate professor at Adelphi University who teaches a course on Bitcoin and author of “Cryptocurrencies.
It would take more than a year for the first economic transaction to take place, when a Florida man negotiated to have two Papa John’s pizzas, valued at $25, delivered for 10,000 bitcoins on May 22, 2010. “That transaction essentially established the initial real-world price or value of bitcoin, Fast forward to today, and that same transaction “would have a value of $610 million,” In honor of this pivotal moment, cryptocurrency fans and supporters call May 22 Pizza Day.
By their very nature, cryptocurrencies are freewheeling, not beholden to country borders or specific agencies within a government. But this nature poses a problem to regulators used to dealing with clear-cut definitions for assets, because the regulators are trying to regulate the Unregulated.
The question in every regulator’s lips today is How can cryptocurrency be regulated? or Who should regulate Cryptocurrency?
Dating back to the pending confusion about cryptocurrency by the US regulatory agencies, the Commodity Future trading Commission(CFTC) recognize Cryptocurrency as a commodity while the Internal Revenue services (IRS) recognize Cryptocurrency as a property, the difference classification of cryptocurrency has yet to solve the underlying issue about the taxation.
According to Perry Woodin, CEO of Node40, during an interview session addressed the impossibility to calculate the taxation without a clear understanding on how the blockchain technology works.
A popular question has sprouted up among hardline cryptocurrency advocates and mainstream investors alike: how can the government regulate Bitcoin and its alternatives?
The regulators are having a hard time understanding the concept of Decentralization. Cryptocurrency is decentralized, not controlled by an authority or government. Cryptocurrencies are governed by the users’ consensus over a set of rules. They are independent from political influence and actions of monetary authorities. This also means that in case of cryptocurrencies’ non-compliance with a country’s laws or regulations, there will be no institution to hold accountable.
The very personality of cryptocurrencies makes them a likely candidate for the next financial fantasy. “Traditional” assets, such as stocks, bonds, real estate, commodities or other currencies, are controlled by real-life events, the financial performance of the company or country. Although the value of these assets is also occasionally inflated, the risk of becoming a financial bubble becomes much greater without such anchors in reality.
Cryptocurrencies have no physical grounding and their price is determined largely by the demand. This means they are worth only as much as users are prepared to pay for them at any given moment, making them highly susceptible to volatility and sudden price changes. For example, earlier this month, bitcoin posted a sudden dip of 29 per cent, losing $38 billion in a matter of days. Certainly not an investment for the faint of heart.
The issue of regulators trying to regulate cryptocurrency has been deemed impossible which has led some countries to ban Cryptocurrency related activities in their country. China on September 24 declared Cryptocurrency illegal in the country while On February 5, the CBN released a ruling that orders all financial institutions to stop facilitating crypto transactions and desist from transacting with entities engaging in crypto.
The question running through our minds right now, can cryptocurrency be regulated and the simple answer is No. That is why the regulators in various countries are fighting against it.
Cryptocurrency has proven to be what the world needs right to eliminate the traditional control system in the financial world.
