I have always believed regulation was inevitable and this is actually one of the reasons I invested in Ripple. It’s no surprise that they are calling for regulation as they benefit the most. As worried about them as I am (saving for another article) this is an excellent hedge against this inevitability. Ripple stands to profit from this as it already has very good relationships with big finance and governments. Any regulation is very likely to benefit Ripple the most.
Ripple’s, Ryan Zagone, ironically titled, “head of regulatory relations” has called on the UK to adopt 3-regulatory moves and has suggested they take a cue from Japan. This is both good and bad, regulation, if fair and easy to follow can remove uncertainty and strengthen the countries that do it right. I think Japan is a good example of regulation that has gone right and helped cryptocurrency flourish.
Zagone has called on the three issues to be regulated “namely consumer protection, financial stability and anti-money laundering “. Consumer protection is a given and I wonder why no one has also said “insurance coverage” as this would take most of the risk out of holding cryptocurrency and the risk of theft and hacks. When it comes to “financial stability” it depends on what he means and what the UK government would take it to mean? I would take it that this would be the part that would help out Ripple and possibly stunt the growth of competitors to Ripple. When it comes to anti-money laundering this is a given but again, how do you do it without harming or offending law abiding citizens? Or will these laws and regulations be a pretext for both Ripple and Big Banking to squash the abilities of everyone else?
The UK Central Bank’s, Mark Carney has said the following about cryptocurrency.
- “The time has come to hold the crypto-asset ecosystem to the same standards as the rest of the financial system. Being part of the financial system brings enormous privileges, but with them great responsibilities,” Carney said in a speech on Friday.
- “A better path would be to regulate elements of the crypto-asset ecosystem to combat illicit activities, promote market integrity, and protect the safety and soundness of the financial system,” Carney said.
- Carney also slammed the ability for cryptocurrencies to fulfil the role of money, saying they are “failing” as a medium of exchange and are “proving poor short-term stores of value.”
- “This extreme volatility reflects in part that cryptocurrencies have neither intrinsic value nor any external backing. Their worth rests on beliefs regarding their future supply and demand —ultimately, whether they will be successful as money.”
- “At present, in my view, crypto-assets do not appear to pose material risks to financial stability,” Carney said.
Well, Mr. Carney was as honest as he could be, from the banking sphere and without losing his job. I agree that there is almost nothing backing most cryptocurrencies, aside from mining investment. However, this is about the same, if not better than fiat which is printed without any backing of assets since the gold standard has long been abandoned. But let’s read between the lines, he wants regulation and he wants cryptocurrency held to the same standards as traditional finance, but at the same time slams it as being a poor store of value (like Soros who now says he’s investing). Regulation will be tricky, because you are then giving all cryptcurrency legitimacy as currency by regulating it as such or even to traditional financial standards.
Everyone has their own interest in all of this but it will be interesting to see how this plays out. The game is different now and governments cannot easily seize crypto assets, nor can they shutdown major players who can move away from their jurisdiction with the click of a button. If smart people are in charge of regulation they will do it right, but if bankers alone are involved, and continued to feel threatened, I predict carnage, and that it will ultimately harm or even topple our current financial system.
Let’s hope things go smooth and that regulators are not influenced too much more when it comes down to it.