Written by Gaurav is thirsty
As we move into the middle of 2023, one truth is undeniably clear – the world of cryptocurrency has come of age. The once-daunting boundaries of currency are rapidly fading, replaced by the fascinating new landscape of digital assets, all playing a major role in redefining the global economy.
|year||Illegal activity as a total volume of crypto transactions (%)|
The recently released Chinalysis 2023 Cryptocrime Report and 2022 Geography of Cryptocurrencies report underscore the clear benefits of strong crypto regulation, particularly in mitigating illegal activities. These reports reflect a clear inverse relationship between effective regulation and illegal activities in the cryptosphere. Overall illegal activity, measured as a percentage of total crypto transactions, has dropped significantly over the years – from 0.86% in 2017 to just 0.24% in 2022. The presence of control measures significantly reduces the incidence of abuse and reinforces the need for such structures. In the crypto landscape.
The past five years have seen a paradigm shift that has seen the rise of comprehensive legislative frameworks that seek to define not only cryptocurrencies but their existence and use. Let’s uncover recent developments in the global crypto landscape to help shape India. Approach to harnessing the potential of cryptocurrencies.
United States: The Need for Clarity
In the United States, we have seen the SEC’s determination to tighten regulations, especially after the recent collapse of FTX. The need for an effective regulatory center has never been stronger, especially as established exchanges like Coinbase, Kraken, and Bittrex contend with confusing regulations. This situation underscores the need for transparent policies and a strong center for regulation, but it also indicates the importance of geographic diversification for the survival of crypto exchanges.
Latin America: Trailblazing Digital Adoption
Far from the strict regulatory environment of the US, Latin America has pioneered the adoption of digital money. Central bank digital currencies (CBDC) and cryptocurrencies are no longer abstract concepts, but tangible mechanisms that enable financial inclusion and protect against macroeconomic volatility. El Salvador’s granting of legal tender status to Bitcoin marks a remarkable precedent – turning the theoretical benefits of digital assets into practical, economic solutions.
European Union: Standardization is key
The European Union is on a firm footing, making significant strides towards standardizing cryptocurrency rules. Harmonized regulations among its members will result in simpler and clearer rules for cryptocurrency exchanges and custodian wallet providers, laying a strong foundation for market integrity, investor protection and compliance.
Asia and the Middle East: A Mixed Bag
Asia Shows Diverse Attitudes To Crypto Singapore, the UAE and Japan have become major hubs of crypto activity, underpinned by strong regulatory structures. However, China has gone the other way, implementing stricter bans that have ramifications for its crypto community. However, this diversity is not a weakness, but a testament to the adaptive nature of digital assets and their various applications across different economic landscapes.
India: Pioneering the Uncharted Path
Navigating these global developments, India is cautiously exploring its stance on crypto-regulation. The question of whether cryptocurrencies should be classified as commodities or currencies remains unanswered. Our approach always leans towards prioritizing investor protection and financial stability.
However, India’s future with cryptocurrency should reflect more than just caution. It should resonate with the innovations and opportunities offered by digital assets. We are at a point where the world can learn from the US’s ‘confusing regulations’ to Latin America’s ‘inclusive finance’ model and the EU’s ‘standardisation’ approach.
Crypto-regulations should no longer be a topic and should instead be prioritized in forums like the G20. It is critical that we provide an appropriate, transparent framework that not only protects investors, but also fosters innovation and growth and broadens our financial ecosystem.
|area||Percentage share of global crypto trading volume||Year-on-Year Growth in Crypto Transaction Volume 2020 vs 2021 (By Region)|
|Central and South Asia||15.8%||35%|
A look at geographic trends reveals another compelling narrative. Regions that have adopted crypto-friendly regulatory frameworks, such as North America and the EU, which contribute 19% and 21.9% to global crypto trading volume, respectively, also show lower rates of illegal transactions. On the other hand, regions like Latin America and Asia with growing crypto transaction volumes indicate the potential to further reduce illegal activities with effective regulations.
The evidence is clear: with careful regulation, the crypto domain can thrive while minimizing risks. This is an encouraging sign for India as we try to formulate our own cryptocurrency regulatory policies. By learning from these global trends, India can build a secure, transparent and thriving crypto ecosystem. We should consider regulation not as an obstacle, but as a catalyst that will unleash the true potential of digital assets and lead us into a new era of digital finance.
Looking Ahead: Embracing the Future
As India’s largest cryptocurrency exchange, we at BitBNS believe in the transformative power of digital assets. We are committed to deliver the benefits of this new asset class to every Indian by providing a secure and transparent platform for their crypto journey. The global popularity of cryptocurrencies is a call for India to create a stable and forward-looking regulatory environment. We must embrace the digital asset age by providing regulations that are clear, adaptable and put us on the right side of history. The future of finance is here and it’s digital. It is time to tune our regulatory frameworks to its frequency. Let’s enable an inclusive financial ecosystem that empowers every person and ushers in a new era of economic growth and innovation.
the author CEO and Co-Founder, BitBNS
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