Some of the world’s leading economies are taking a fresh peek into how the cryptocurrency market should be regulated in their respective regions.
Rather than banning ICOs outright like in China, these countries’ monetary authorities and regulators are looking to how to control, but not completely stifle, the growth in digital currencies.
The headache for many agencies though is to figure out what would be the correct way of doing this. Due to the alternative nature of crypto coins, many regulators struggle to class it under the same policies as traditional investment assets.
Japan is set to introduce more rigorous oversight on cryptocurrency exchanges in October this year, but regulators are still coming up with ways to do this efficiently without killing the growth of the industry.
Japan’s Financial Services Agency (FSA) is looking at how to handle ICO’s to reduce money laundering and fraud. This includes establishing specific accounting rules on how to treat cryptocurrency transactions.
Meanwhile MAS, the Monetary Authority of Singapore, said in a memo in August that it intends to regulate the sale of cryptocurrencies if it relates to products under their securities regulation. Their main concern is the potential for money laundering and terrorist financing through the ICO process.
The memo states:
“ICOs are vulnerable to money laundering and terrorist financing (ML/TF) risks due to the anonymous nature of the transactions, and the ease with which large sums of monies may be raised in a short period of time.”
Similarly, guidelines on the US Securities and Exchange Commission (SEC) website urge buyers of digital tokens to be vigilant and provide them with ways of identifying investment schemes that could be used for nefarious purposes.
Most regulators realize that there’s no real benefit to completely ban cryptocurrencies due to the economic advantages that it holds, nor is it possible. They will have to shut down the Internet. Instead, what they are looking to do is to focus on an area where they can exercise some form of control. And this area seems to be where digital coins meet fiat currencies, i.e. cryptocurrency exchanges.