The cryptocurrency market arose spontaneously and, in fact, is still in its infancy. The reputation of a relatively young financial industry is no longer perfect. Ideally, the decentralization and anonymity of cryptocurrencies, combined with the lack of control by government agencies, including intelligence agencies, should serve the benefit of humanity.
In practice, these opportunities are not always used for good purposes.
What is cryptocurrency in terms of legislation
Bitcoin was created as an alternative money, but became not a means of payment, but an investment asset. Ethereum is more like shares of a company. Stablecoins are created to simplify financial transactions.
This variety of functions and use cases for digital assets makes the task of legislators very difficult. Accordingly, there is still no consensus in the world regarding the status of cryptocurrencies.
Digital Wild West
Drug smuggling, arms trafficking, sponsorship of terrorism are just some of the areas of illegal activity in which the use of cryptocurrencies is possible. Digital assets can be used as a means to circumvent international sanctions.
Another problem of the young sphere is that it is as old as the world. Fraud has flourished in an unregulated market. For example, dark personalities create exchange services and actively advertise them, attracting users with very favorable conditions.
The bait falls on inexperienced people who would like to sell SC at a higher price and eventually lose their savings when the scammers close the service and disappear in an unknown direction.
In addition to fraudulent services, a lot of problems are created by shitcoins, coins without clear goals and with a low cost. Launching a native token based on platforms designed for deploying decentralized applications is currently technically easy and not too expensive.
Next, the pump and dump scheme is turned on. Many people fall into the FOMO trap, according to some reports, more than 2 million people suffered from fraud with shitcoins during 2022.
The absence of regulation should ideally ensure freedom and justice. In reality, it often turns out exactly the opposite: the criminals manage to go unpunished, and the victims cannot be helped.
First steps towards regulation
Centralized cryptocurrencies were among the first to come to the attention of regulators. If the management of the exchange wants to work in the legal field, the company must obtain a license for its activities.
Licensing, in turn, implies compliance with the requirements of financial legislation. In particular, trading platforms are required to provide information about each client and regularly provide financial statements.
On the one hand, this should protect the exchange itself from unwitting complicity in criminal schemes or fraud aimed at the platform itself. On the other hand, it is to protect traders from possible fraud and provide a mechanism for compensating losses in case of force majeure.
There are fewer and fewer platforms where you can anonymously sell TLM for PHP, but so far we are not talking about a one-time and instant control of all cryptocurrency exchanges. It will take some time to develop effective regulatory mechanisms.
This should happen gradually, taking into account the interests of all interested parties. Sooner or later, the digital Wild West will acquire the features of a civilized market.
Progress does not stand still and it is very likely that technologies will soon appear that will finally nullify even the appearance of anonymity on the network.
The question of the compatibility of cryptocurrencies and market regulation will be finally settled, and the problem of protecting privacy will move to another plane.
2022 really has every chance of becoming a turning point in the history of the cryptocurrency market, but what its near future will be is not yet clear.
