Recently,most governments came to the conclusion : Crypto is here to stay. As such, there are some politicians in the governments that are asking for a full regulation & taxation on Crypto. However are these ideas feasible and if so what could it mean for everyone who uses Crypto? We will take a closer look at the possibilities.
· Regulation of every digital currency.
The first option the governments have is regulating everything Crypto. Some think that It is a great idea regardless of whether it’s possible or not. However identifying Crypto users will be a hard nut to crack.
First problem that these “regulators” will encounter is the fact that all Crypto transactions are “anonymous”. This means that is can be quite an effort to find out who is using Crypto. Once they established that, it is another thing to actually find these people. Some can use VPN or other programs to hide their identity and/or location.
(We are aware anonymity features ar very hot right now, but left these out on purpose.)
Second difficulty is that any Crypto user will have multiple wallets, be it Bitcoin, Litecoin, Dogecoin, etc. Some even create other transfer addresses within their wallets which can mean that miss X has 2 or more different accounts of any Crypto currency.
So how could a government navigate these difficulties? The politicians can circumvent these problems a bit by creating a law that could order every company that accepts Crypto payments to “show every Crypto transactions & activities”.
Regardless of the privacy breaches and possible misuse of this data, it is a relative easy way for any government to get their hands on Crypto data & addresses. There is a possibility that the aforementioned problems will re-appear during this “information gathering”.
However any government that is a bit entrepreneurial savvy will not create such a law that gives them that much control because of the simple fact that other countries may not follow the same thinking process.
So if a government creates such a law it will undoubtedly hamper the local and big businesses that accept Crypto payments for their goods and/or services. There is an additional problem with this. The government will only “catch” people that buy goods with Crypto and let the people that day trade on exchanges “ go free” so to speak.
Regulation of everything Crypto does seem great from a government standpoint. They can see how much someone is making on Crypto on a monthly basis. This will lead to taxation on Crypto, which will take a huge chunk out of the profits that someone can make and basically making Crypto less interesting to invest in or use (this can be circumvented but then it’s a question if it’s still legal).
Another great thing that can flow from regulating everything Crypto is that people who do not work and generate an income for their families can be taxed or even fined. This is a more darker path but not mentioning this would be a mistake.
We know some Crypto enthusiasts that lost their jobs during the economic crisis and because of Crypto currencies they could stave off repossession of their house, their car, etc. Something legislators need to really think about before creating laws concerning regulation and control of Crypto.
Regardless of the ethics and the obvious difficulties concerning Crypto, how are you going to “log everything”? Databases need to be created, people need to be educated, facilities need to be up to date, hi tech personnel need to be hired and have a reasonable pay level, etc.
If we look at the financial “state of the union” of governments around the world, only a few countries can pull something like that off.
So the “total regulation” avenue will not be coming for a long time. There are however some other more reason-based thinkers in politics, and yes they do exist, that opt to not take on the entire Crypto world, but focus on the exchanges.
· Regulation of the exchanges.
From a political viewpoint this is perfect. The media will portray these politicians as creating stability to the digital currency by regulation exchanges. Some problems with digital currency come from exchanges that suffer from their own success and if people want to ask for their money they can’t pay because they do not have enough liquidity to pay them out.
It is only logical that politicians focus in on the exchanges because of the troubles surrounding exchanges. If the government can force the exchanges to be transparent with the government this can ease a lot of tensions and could provide a stabilizing factor for Crypto in general.
Does regulation mean automatically taxation? Not necessarily. It is quite possible that the government will try to gather information first and then see what it can do with the gathered information. Whatever the case it will be up to the government to decide how that will look like if regulations of exchanges will ever come to pass.
However we have heard some unconfirmed rumors that some countries are brainstorming over some form of “regulatory institute” that will check up some “major parts in the Crypto phenomenon”. Some of these rumors originated within the FED, the US government, Belgian, Dutch, French, Egyptian, etc. governments as well. So this clearly shows that governments are thinking about regulating Crypto in some way or another. There is a high probability that the governments will focus on the exchanges because it is far easier and gets better results.
We’ve written this article because of the many questions about regulation and “what forms it can take” we received from our readers. This analysis is based on the available facts, information, credible sources within governments but also on some unconfirmed rumors ( however we trust the source and they haven’t failed us yet).