Governments showing more interest in cryptocurrencies
Wednesday, April 04, 2018
The United Kingdom government recently announced the launch of a "cryptoasset taskforce" to take a closer look at new financial technology. The goal is to safeguard the nation against the dangers of Bitcoin and also to harness its potential benefits.
The joint task force will be set between the Treasury, the Bank of England and the Financial Conduct Authority. Together, they will assess and manage all risks associated with cryptocurrencies.
But the UK government is not the only one worried. More governments around the globe are getting involved and ready to act as financial authorities are paying attention to developments in cryptocurrencies.
The UK has proven to be Europe's fastest-growing adopter of cryptocurrency, which calls for more caution. Recently, it granted an e-money license to Coinbase, one of the most popular and accessible cryptocurrency exchanges, for its UK-based operations. The formation of a "cryptoassets taskforce" will help the UK manage the risks around cryptocurrencies.
For most countries, crypto monitoring involves increased regulation to prevent the use of digital currencies for criminal activities. In the digital age, however, one cannot stop at monitoring. It is quite clear that blockchain technology like Bitcoin and Ethereum are here to stay. The UK's actions could be a guiding example for other nations that want to stay ahead of the digital currency curve.
The taskforce will start with a strategic look at the burgeoning sector for financial innovation. Continuous investigation of the risks and rewards of digital money and its technology will then lead to a more tactical approach.
In 2017, cryptocurrencies saw wild price swings. This drew a lot of public and political attention along with regulatory scrutiny. The hype has also united the financial community in their endeavors. They are willing to embrace the new development and create a professional framework around these emerging assets. With recent news of Google announcing a ban on cryptocurrency ads like those belonging to initial coin offerings (ICOs,) we can expect rapid developments in this sector.
However, the recent G20 Summit in Argentina did not see much success in this regard. Instead of a regulatory resolution, the nations agreed to keep a watchful eye on cryptocurrencies. At this stage, we are looking at individual developments rather than international agreement. This lenient statement has relieved cryptocurrency enthusiasts, though that may not last long.
The participant nations acknowledge their potential for "efficiency and inclusiveness." They also pointed out they have more potential for crime-related use.
It seems that it is easier to manipulate digital currencies than traditional money for terrorist financing, money laundering or tax evasion. Bankers are urging the international Financial Action Task Force on Money Laundering (FATF) to apply their standards and "advance global implementation" for tighter cryptocurrency restrictions. If they agree, this will help regulate the booming industry faster.
All eyes, especially those of the crypto community, are now on the U.S. About a month ago, U.S. Deputy Attorney General Rod Rosenstein shed some light on the government's approach toward digital currencies.
A taskforce set up by the Department of Justice has been looking at creating strategies for dealing with tech-related crime. This taskforce combines experts from the FBI, DEA and the U.S. Marshals Service.
Rosenstein linked cybercrime with the use of cryptocurrencies as a way for criminals to stay anonymous. The early adopters have gotten away with criminal intent because governments were slow to change. But now taskforces like these will use the latest technology to play catch up and stay ahead of cybercrime.
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