As the markets for digital assets grow rapidly, it has now become imperative to analyze the regulation of crypto assets by governments. This, however, will help see if regulations are perhaps a necessity in the rising crypto world. For the purpose of records, Crypto assets remain those activities, products, or services offered to investors by various crypto exchange firms. In recent times, the calls for robust regulation and enforcement of the Crypto operations dominated the airspace.
Even though the introduction of robust and clear regulation of crypto assets helps safeguard investors, there is no doubt that its absence has positively influenced its market. How? The absence of clearer regulations aided tax evasions by crypto firms. However, some countries of the world recently took differentiated decisions as regards the kind of mechanism to put in place towards regulating the exchanges. They are however fully aware of the menace of money laundering, tax evasion, and terrorism financing attached to the unregulated community.
For emphasis, Crypto firms had in recent times selfishly taken advantage of the absence of regulations to oppress investors. They prone the privacy of traders and investors and further victimize them, using a lending program, just in a bid to enhance their selfish economic gain. These exchange firms on several occasions manipulate the market through the purchase of crypto to heinously inflate prices. In October 2021, the Futures Trading Commission slapped a fine of $41 million on Tether, the biggest stablecoin platform, for misrepresenting the nature of its reserve. It is in view of this prevalent revelation that regulations become inevitable and necessary for a hitch-free Crypto economy.
Regulations of Crypto Assets in Countries
First and foremost, Canadian regulators became grossly proactive towards Crypto operations in the city. Canada, according to reports in February 2021 broke the ice by approving a bitcoin exchange-traded fund. In consequence of this, the regulators directed all Crypto trading firms within the country to register with them.
More so, the crypto community faced rigorous regulations in the United State since 2021. In New Jersey and Texas, for instance, regulators ordered immediate cease and desist directives against the Celsius network. The SEC issued a legal threat to one crypto exchange, Coinbase, owing to her lending program. This threat, however, forced the firm to leave its lending service plans. Presently, The SEC revealed the intention to scrutinize all crypto lending assets relayed by some exchange firms. The crypto exchange firms are Voyager Digital Limited, Celsius Network, and Gemini Trust Co.
In the United Kingdom, crypto remains a mere property and not tenable as a legal tender. The Financial Conduct Authority mandates all crypto exchanges to register with the UK. The agency introduced specific requirements to be met by those firms. One of those requirements remains not offering crypto derivatives trading. Taxation in the UK, according to their regulations, relies solely on the nature of the Crypto operations and its engagers.
The situation remains the same in India and China as regulators put in place drastic measures to regulate Crypto. Even though the coin is not seen as a legal tender, investors are liable to pay taxes on trading profits. In China, the People’s Bank banned all forms of crypto exchanges obtainable in the country. The bank claimed the exchanges aid public transactions without taking approvals. This, however, forced many of these firms out of business.
Now, the prevalent indices as analyzed justify the robust need for clear, deliberate, and sustained regulations of Crypto exchanges. Countries of the world must come together to create a common synergy that will regulate the excesses of crypto operations. More so, just coming up with regulations is not enough. These regulators must employ an effective mechanisms to enforce those regulations on the concerned exchanges.