In response to the news that crypto business leaders are objecting to EU proposals to regulate cryptocurrencies, including requiring crypto firms to disclose transaction details;
Amrit Dhami, Associate Analyst in the Thematic Research team at GlobalData, comments:
“Anonymity is big within the world of cryptocurrency, from the anonymous crypto wallets to the creative pseudonyms of crypto and NFT creators. It’s a big selling point for consumers who don’t want their transactions to be traced. It also maintains a veil of mystique around the blockchain community that in itself propagates further hype and intrigue.
However, crypto that operates in a decentralized manner can be used in illegal transactions. Furthermore, the lack of transparency renders crypto exchanges risky as their legitimacy cannot be established. A regulatory stamp of approval could go a long way in making cryptocurrency more accessible and widespread among consumers.
“It’s not just the EU that has its eyes on the crypto Wild West. The UK government has committed to creating a stable, regulated environment for the growth of cryptoassets. Rishi Sunak, Chancellor of the Exchequer, has introduced measures to send a crystal-clear message: before cryptoassets become part of British financial services, they’ll need to be adequately covered by regulation.
“Sunak’s attention to regulation, though a lighter approach than the EU’s, may have set a precedent for governments looking to accommodate cryptocurrency in their financial landscape. For him, turning the UK into a crypto hub and implementing crypto regulation are not mutually exclusive scenarios. At any rate, crypto firms will continue to butt heads with governments as they are currently thriving off wild speculation and a lack of regulation.
“Stablecoins – which are, as the name suggests, less volatile than cryptoassets like Bitcoin – and central bank digital currencies (CBDCs) could be more reliable than privately issued cryptoassets such as Ether and Bitcoin. If crypto firms don’t bend to regulatory demands, governments can back these as widespread payment options instead.”