The nature of Bitcoin and crypto empowers the individual, and strips power from the state and central actors. As regulation demands increase, do they threaten crypto or serve as need for adoption?
An increasing number of influential voices and major institutions worldwide are now seriously talking about regulating cryptocurrencies. Leaders of the EU, G7, governments, financial institutions and regulators on a global scale are all realizing that Bitcoin and cryptocurrencies are not only a force to be reckoned with, but that blockchain technology will cause unimaginable change to the current financial system, the state of the global economy and the way taxes are paid.
This uptick in regulatory discourse is the obvious result of many years of accelerating growth and serious building by the global crypto community. Hundreds of blockchain protocols, thousands of coins and tokens, and tens of thousands of crypto companies have been and are currently developing apps, services and products to foster and advance the decentralized economy.
Following the latest G7 meeting between the finance ministers of the 7 most powerful governments in the world, German Finance Minister Olaf Scholz stated: “we must do everything possible to make sure the currency monopoly remains in the hands of states.”
The nature of Bitcoin and crypto empowers the individual, and strips power from the state and central actors.
There is no way around it. The decentralized nature of Bitcoin and cryptocurrencies constitutes a direct threat to the current structure of the failing financial system, in which centralized actors, central banks and national governments are the obvious power holders, calling the shots in their own favor and self-interest.
Meanwhile, the US Treasury released a statement in conjunction with the same virtual G7 meeting saying “the evolving landscape of crypto assets and other digital assets, and national authorities’ work to prevent their use for malign purposes and illicit activities...there is strong support across the G7 on the need to regulate digital currencies.”
Talking about regulating cryptocurrencies is one thing, actually agreeing on a regulatory framework and implementing these rules is an entirely different ballpark.
By design, Bitcoin and many other of the world’s most prominent crypto assets are not only decentralized but also anonymous, borderless and non-confiscatable. This means that if governments wish to execute the same power they have over their own inflating fiat currencies while gaining complete oversight of transactions, they will have a very hard time achieving this.
That said, for cryptocurrencies to gain a place and reputation as a secure place for both retail and institutional investors on a more widespread and mass adopted scale, regulation might be part of the solution. Many argue that regulations and legislation protecting investors from scams, ponzi schemes and other malicious pitfalls should be viewed as a necessity, rather than a threat to crypto.
Well known libertarian and former US Congressman Ron Paul stated accurately on the rise of cryptocurrencies that “the more successful crypto is going to be and Bitcoin is going to be, I think the more you have to be aware of what's going on in the government will become more aggressive… I see crypto as not a creature of the government, but the government's watching very closely.” These words ring truer for each year that passes. To believe that crypto regulation, or at least a well-coordinated and global attempt by the world’s major powers to regulate digital assets, is far off in the distance is both naive and uninformed.
However, the recent surge in institutional investor interest and entry into Bitcoin does bode well both for the health of the Bitcoin network, democratizing it by having growing exposure across all spectrums of society, as well as mitigating the possibility of government overreach into the Bitcoin protocol.
Good luck trying to regulate the Bitcoin network itself. It simply won’t happen.
It is a big difference for governments and international financial bodies to try and attempt to regulate Bitcoin itself, rather than stablecoins, crypto assets that may be deemed securities, or the off/on-ramps into the world's most popular cryptocurrency. Bitcoin has withstood the test of time, keeping its financial policy intact for over 11 years, creating blocks every 10 minutes, without a care in the world of what forces have been wanting to hamper the network’s progress.
Finally, although the Bitcoin blockchain itself is unlikely to ever be regulated, the framework for exchanges, custodial wallets, crypto management funds and the likes will probably see a wave of regulations coming in the not too distant future. That’s why it’s important to keep a list of all your transactions, trades and transfers, if you plan to cooperate with tax authorities that is.
Important to note that we at Klever are aiming to build a new and more fair economy based on decentralization, transparency and equal opportunity. We are building the Klever ecosystem of apps and the Klever Blockchain with these values as guiding ideals. We are not trying to implement a pirate economy, where free for all, theft and under-the-table deals are aimed to hide transactions, rather than celebrate the transparency that blockchain brings to the table.
The beauty of a non-custodial wallet like Klever is that the power is in your hands. The Klever ecosystem gives custody of keys and funds to the user alone and no one else, while simply serving as a gateway into the ever-expanding and exciting world of blockchain. This fact makes regulating non-custodial wallets a near impossibility for authorities.
Misha Lederman
Director of Communications and Marketing at Klever.io
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