Cryptocurrency Self-Regulation – The Way Forward?
The cryptocurrency phenomenon has exploded in recent years since the Bitcoin boom that left many who missed out grasping at straws for the next big cryptocurrency. From Ethereum to Litecoin to Ripple, more people hopping on the crypto bandwagon. The flip side to this is that with all the well-meaning folks, there are also tons of bad actors who are using the realm as a means of funding illegal activities – mainly scam artists, tax evaders, money launderers, and terrorists. Many communities turning to cryptocurrency self-regulation.
With all this taking place, governments from around the world are making an effort to increase cryptocurrency regulation by either banning crypto-trading entirely, applying conditions on trading, and in some instances releasing their own cryptocurrency (think Venezuela). Despite these efforts, there has been no progress on this front, which is why various crypto communities in Japan, Croatia, India, and the UK have come together to form proxy trade bodies within the realm – with the goal of implementing cryptocurrency self-regulation. The Japanese push for this has largely been due to the theft of $500 million worth of the NEM token from one or Japan’s largest exchanges – Coincheck.
There are many reasons why this may work better than the conventional approach of waiting on governments to decide on regulations. Let’s run through three of them!
Regulation by people who understand the crypto world
One of the major drawbacks of crypto regulation talks by governments and other formal institutions has been that there is almost a sense of ignorance about how cryptocurrencies work. For example, recent regulations like the GDPR in Europe, which will impact businesses who leverage blockchain tech, do not factor in the fact that the entire realm is border-free and there is no real way of limiting which countries data flows to. Additionally, strict KYC regulations also take away from one of the crypto space’s major benefits – anonymity.
With cryptocurrency self-regulation, this would be less off an issue because the groups working together would be well-versed in the crypto space and actually know what they are talking about. By breaking from past trends, crypto communities and bodies can also be influential in working with the very governments that are trying to regulate them – this is good for all parties involved.
With cryptocurrency self-regulation, decision will be made much faster
Governments are taking ages to come up with formidable crypto regulations that could actually transform the space. A lot of this has to do with lack of understanding, however, with everything else that is going on in the world, cryptocurrency regulation may not necessarily be at the top of the plate of many governments. After all, it’s only recently that this became a point of emphasis.
Because the crypto-based regulatory bodies comprise parties from the cryptocurrency exchanges and the greater crypto community, there is a natural incentive for them to lock in appropriate and manageable regulations much faster than you would see with conventional regulators.
Adaptation to new developments
One of the go-to complaints about cryptocurrencies and the blockchain realm at large is its unpredictability and volatility. The health and performance of a cryptocurrency on one week could be very different to how it performs the following week and the week after that. Additionally, as the technology gets older (10 years old next year), the cryptocurrency world would be susceptible to far more threats, which would need to be addressed immediately. With cryptocurrency self-regulation, this process of responding becomes significantly streamlined.
Governments have been talking about regulation for many months, if not years, however, there is still very little change. This makes it very unlikely that they’d be able to respond to any one of the many crises that could pop in the crypto space over the next few years. With cryptocurrency self-regulation, on the other hand, this adaptability and flexibility are far more possible. given that the regulators know the space better, understand where the problems and vulnerabilities are and have the expertise to address any problems.
What is IAME?
The IAME decentralised fragmented identification system transforms the identification process by fragmenting meaningful data into individual components of identification data – think jigsaw pieces in a puzzle – and shares each fragment with a group of third-party validators, who then verify each component assigned to them. The result of this is that the data sharer would be the only person with knowledge and access to all the data in a meaningful way.
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