One of the biggest advantage of cryptocurrencies includes anonymous user ID’s, non-traceable transactions and free from unified control. All these advantages are double edge sword, for some people they may be heaven facilities but for governments all around the world they are annoying.
As governments have zero control over cryptocurrencies they are not taxable and there is no check by regulatory bodies to see who is sending money to who. You still think any government will accept such currency? For cryptocurrencies, the governments have a big no.
The chairman of the U.S. Securities and Exchange Commission, Jay Clayton said in a meeting at the Federal Reserve Bank of New York “Where we see fraud, and where we see people engaging in offerings that are not registered, we are going to pursue them because these types of things have a destabilizing effect on the market.”
EU and UK governments are planning to have a crackdown on cryptocurrencies due to increase in crime and tax evasion fears. As per EU plan, online platforms where cryptocurrencies are traded will be required to carry out due diligence on customers and report suspicious transactions.
Government Regulations on Initial Coin Offerings (ICO’s)
Here is what popular governments around the world say about ICO’s.
U.S. Securities and Exchange Commission SEC verdict about ICO
“Investing in an ICO may limit your recovery in the event of fraud or theft. While you may have rights under the federal securities laws, your ability to recover may be significantly limited.”
An ICO will come under federal securities laws only if the virtual coins or tokens offered by ICO fall in the category of securities. If you want to get assistance from U.S. Securities and Exchange Commission make sure the ICO you are investing is registered with SEC.
Financial Conduct Authority FCA of UK declares majority of ICOs outside its regulated space. Only few ICOs that involve regulated investments fell under FCA regulations. It’s extremely unlikely to have access to UK regulatory protections like the Financial Services Compensation Scheme or the Financial Ombudsman Service in case you have some problem with your ICO.
China and South Korea Banned ICO’s
People’s Bank of China placed a ban on all type of ICO’s in the first week of Sep 2017 declaring it and illegal fundraising.
In the same month, Financial Services Commission of South Korea also banned all sort of ICO stating that “We expressed a serious concern that the recent inflow of funds into the nonproductive speculative direction is showing up. As a result, we believe that additional measures are inevitable in order to switch to productive investment.”
There are regulated cryptocurrencies like Ripple and IOTA, currently trading at number three and nine. Ripple is widely used by banks all around the world for fund transfer. The future of legalizing cryptocurrencies lies with such regulated cryptocurrencies as there are zero chances that governments may accept the unregulated ones like Ethereum, and several Altcoin.
by Sumiko Shibata