The initial offering of coins on blockchain platforms has colored the world red for technology startups around the world. A decentralized network that can assign tokens to users who support the idea with money, revolutionizes and rewards.
It turned out that Bitcoin, which turned a profit, was a “property” for early investors, giving multiple returns in 2017. Investors and cryptocurrency exchanges around the world took the opportunity by writing enormous returns for themselves that led to a rise in multiple online exchanges. Other cryptocurrencies like Ethereum, Ripple and other ICOs promised even better results. (Ethereum grew by more than 88 times in 2017!)
Although the ICOs put millions of dollars in the hands of startups within days, the governing governments initially decided to keep an eye on the fastest development of fintech ever that had the potential to raise millions of dollars in a very short period of time.
Countries around the world are considering regulating cryptocurrencies
But regulators became wary as the technology and its underlying effects gained popularity as ICOs began to think of multibillion-dollar funds – and too much on proposed plans written on whiteboards.
In late 2017, governments around the world took the opportunity to intervene. Although China has completely banned cryptocurrencies, the SEC (Securities and Exchange Commission) in the U.S. has highlighted the risks posed by vulnerable investors and suggested that they be treated as securities.
A recent warning statement from SEC President Jay Clayton released in December warned investors by mentioning,
“Please also recognize that these markets extend across national borders and that significant trade can take place on systems and platforms outside the United States. Your invested funds can travel quickly abroad without your knowledge. As a result, risks may increase, including risk that market regulators, such as the SEC, may not be able to effectively monitor bad actors or recover funds. “
This was followed by India’s concerns, in which Finance Minister Arun Jaitley said in February that India does not recognize cryptocurrencies.
A circular sent by the Central Bank of India to other banks on April 6, 2018, asked banks to sever ties with companies and stock exchanges involved in trading or cryptocurrency transactions.
In Britain, the FCA (Financial Conduct Authority) announced in March that it had formed a working group on cryptocurrencies and would seek help from the Bank of England to regulate the cryptocurrency sector.
Different laws, tax structures between states
Cryptocurrencies are mostly coins or tokens launched on a cryptographic network and can be traded globally. Although cryptocurrencies have more or less the same value around the world, countries with different laws and regulations may bring different returns for investors who could be nationals of different countries.
Different laws for investors from different countries would make the return budget a tedious and cumbersome exercise.
This would involve investing time, resources and strategies that cause unnecessary prolongation of the process.
Instead of many countries framing different laws for global cryptocurrencies, a single global regulatory body with laws that apply across borders should be established. Such a move would play an important role in improving legal cryptocurrency trading around the world.
Global goal organizations such as ITA (United Nations), World Trade Organization (WTO), World Economic Forum (WEF), International Trade Organization (ITO) already play an important role in uniting the world on different fronts.
Cryptocurrencies originated with the basic idea of transferring funds around the world. They have more or less similar value on exchanges, except for negligible arbitration.
A global regulatory body to regulate cryptocurrencies around the world is a need of the hour and could set global rules to regulate the latest way of financing ideas. Currently, every country is trying to regulate virtual currencies through laws that are in the process of being drafted.
If economic superpowers can reach consensus with other countries by introducing a regulatory body with laws that know no national borders, then this would be one of the biggest shifts in designing a crypto-friendly world and encouraging the use of one of the most transparent fintech systems ever – blockchain.
A universal regulation consisting of parts relating to cryptocurrency trading, refunds, taxes, penalties, KYC procedures, exchange laws and penalties for illegal hacking can bring us the following advantages.
This can make it easier to calculate profits for investors around the world, as there would be no difference in net profits due to uniform tax structures
Countries around the world may agree to share a portion of profits as taxes. Therefore, the share of countries in taxes collected would be uniform throughout the world.
It could save time involved in constituting a number of committees, drafting legislation followed by debates in the legislative arena (such as the parliament in India and the US Senate).
One should not go through the harsh tax laws of every state. Especially those involved in multinational trade.
Even companies offering tokens or ICOs would abide by the aforementioned ‘international law’. Therefore, calculating post-tax revenue would be a cake for companies
A global structure would require more companies to come up with better ideas, thus increasing employment opportunities around the world.
The law can be assisted by an international supervisory authority or global currency regulator, which may have the authority to blacklist an ICO bid that does not comply with the norm.
Not all advantages are when it comes to a law that would govern cryptocurrencies around the world. There are certain shortcomings also.
It may take some time for world financial leaders to come together and make a law. Discussions and their consensus building could be challenging
Countries or economies that provide non-taxable structures may not agree to accept a law that provides for a universal tax policy
A global oversight body or regulatory interference in monitoring ICO-related regulatory developments may not get along well with some countries
Universal law can result in the division of the world into factions. Countries that do not support cryptocurrencies like China may not be a part of it.
The law may be the idea of economically strong nations that could design it in accordance with their best interests.
This law would be centralized with a global regulatory body, as opposed to cryptocurrencies which are decentralized by nature.
The world is getting better together. Whether it’s creating a peaceful world after World War II or coming together to achieve better trade laws and treaties.
The International Trade Organization (ITO), the World Trade Organization, and the World Economic Forum have some of the best brains that define the global economy.
They can come together and be part of the body that will define the economic prosperity of the world. They would help develop global norms on cryptocurrencies and perhaps be part of a regulatory body that would better be a guide and beacon for thousands of ICOs around the world. At first this may take time, but it would make things easier.