That is the question...
As time goes by and Bitcoin reaches more and more people the topic of regulation comes up more and more.
On the one side you have the Bitcoin purists that say it shouldn't be regulated in any way, and then on the other side you have those that say regulation would be good for bringing some stability and confidence to the entire space.
No matter which side of the fence you stand on, legitimate arguments can be made by both sides.
According to the CEO (Bobby Lee) of Chinese Bitcoin exchange BTCC, it's not even a question.
Bitcoin and cryptocurrency markets desperately need regulation according to Lee.
Specifically he had this to say:
"I think regulation is much needed for this new asset class because otherwise it'll run amok from society."
What kind of "amok" might he be talking about?
Well there was the flash crash of Ethereum about a month ago that took the price from $300 down to $.10 in a matter of seconds that comes to mind...
Also just the volatility of the entire space in general is something that can be hard to stomach for most investors.
The challenge?
I think many out there would agree that some regulation of the trading markets is needed, but the question is, what exactly is the best way to go about it?
Lee echoed that sentiment:
"The challenge for regulators is how to craft the rules around this new technology."
"I think it is taking lawmakers and regulators some time to wrap their minds around it, and to come up with appropriate rules and laws to govern companies, how we do business, to govern individuals, and how people conduct business online."
So they have to figure out how to regulate it for trading/investment purposes and they have to figure out how to regulate it for business transactional purposes.
Some regulation is already starting to happen.
Earlier this year the People's Bank of China set up a task force to carry out inspections and ensure bitcoin exchanges have implemented anti-money laundering systems. They have also issued warnings to exchanges of the consequences of not adopting these standards.
Central banks are currently undecided how they want to classify Bitcoin, which is really the crux of the problem. Once they have decided what it is exactly they can move forward with how to regulate it.
Most have decided it is an asset and should be treated accordingly.
Others have decided it is in fact a currency, like Japan, and have legalized and regulated it as a form of money.
According to Lee:
"Central banks need to start embracing the fact that bitcoin is a new digital currency that's being traded actively in China and around the world."
Not just an asset, but a currency.
Once they start considering it as such they can go about crafting rules and regulations around it.
Conclusions:
I am on the side that says we absolutely need some regulations of the cryptocurrency trading markets. It might sound bad at first, but the amount of confidence that it would bring to the space would bring tons and tons of new money into the space.
Institutional type money.
Yes, some of the anonymity would go away, but the increase in prices would more than make up for it. Plus they would probably put safeguards in place in case of hacks.
Similar to the FDIC insurance at banks.
In my opinion the benefits would more than make up for any negatives and it would just be the next step in bringing cryptocurrency to the masses.
Regulating it as a form of digital currency is a topic for another day... :)
Stay informed my friends!
Sources:
http://www.cnbc.com/2017/07/11/bitcoin-regulation-btcc-ceo-bobby-lee-says-rules-needed-for-new-asset-class.html
Image Sources:
https://news.bitcoin.com/government-will-fail-regulating-bitcoin/
https://www.benzinga.com/media/cnbc/13/12/4144506/bitcoin-not-just-a-china-thing-says-btc-china-ceo-bobby-lee
http://www.coindesk.com/japan-considers-regulating-bitcoin-as-currency/
https://news.bitcoin.com/a-french-bitcoiner-argues-its-too-early-to-regulate-bitcoin-in-new-york-court/
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