Since the cryptocurrency world is a technological innovation that emerged only a decade ago, there is a lack of concrete regulatory frameworks around it. Due to this lacking, the crypto space has been engulfed in a lot of scams and illegal activities with U.S. regulatory bodies cracking down on them to stop such activities.
The team at @circlepay finally decided the lack of clarity in US regulations was too much of a burden and they are moving the operations of their crypto exchange outside the US.
Outdated regulations are killing innovation and our loss is another country’s gain ??♂️
— Pomp ? (@APompliano) July 23, 2019
As stated on Circle’s website, “Circle is a new kind of global financial services company. A platform for individuals, institutions and entrepreneurs to use, trade, invest and raise capital with open crypto technologies.” This event of Circle’s exit from the U.S. is not being hailed as the most welcoming one because it signifies that the U.S. ecosystem is likely turning a bit too hostile for crypto-linked projects due to regulatory unclarity.
Amid the chaos, many companies stand in a grey area as to whether their services comply with U.S. regulations or not. A crackdown sooner or later is likely to destroy all the progress and innovation thus made. Lack of regulatory clarity is becoming a serious issue in the U.S. and in the smoke of this regulatory tension, a crypto-linked global financial services related company, Circle, has decided to move its operations outside the U.S.
With Circle moving out of the U.S., it might also signal other companies facing regulatory troubles to move out of the country. It is something that the U.S. would certainly not want as the cryptocurrency world is progressing at a very rapid pace and it is expected that in the future it is going to play a major role in global finance. Already billions of dollars are floating around in this space.
Just recently, bitcoin was seen crossing the $3 billion transactions settling mark per day highlighting how the adoption of this space across the globe has increased despite all the troubles. Letting go of major crypto companies that control the global flow would be detrimental to the U.S. economy overall.
There is a catch to regulations as well. The crypto world emerged with a slightly rebellious attitude towards the world governments and the banks. It is supposed to be a decentralized world where people can step in and maintain the network. This is no central party controlling the workflow so consensus is the key to getting things done in the network.
Lack of regulations has spurred up a lot of innovation in this space with privacy coins offering full security to the users to send money. The crypto space can work without regulation, but it would then be harboring a plethora of illegal activities. Bitcoin has already been used in many illegal activities such as money laundering, usage in the dark web and others.
If strong regulations are imposed to tackle this uncertain space, the innovation that is happening in it might get bogged down under official restrictions. If it is to run free, negative elements are likely to overtake. So a tradeoff is what is required to allow innovation as well as to curb the fraudulent activities. This is where governments are stuck worldwide.
Facebook’s Libra is also engulfed in regulatory troubles lately. It has been answering to lawmakers from the U.S. Senate and the House of Representatives regarding how it will carry out its global financial activities. The lawmakers simply don’t seem to trust Facebook enough to handle the flow of money worldwide. It can easily fall into the hands of the wrong people for wrong activities. Regulatory clarity is being figured out but it has been a tough task up till now.
Regulatory unclarity is a huge issue at the moment. It is also the thing that is stopping cryptocurrencies to get large-scale adoption. The government needs to act fast and cautiously towards this double-edged sword. Impose enough regulation to provide a healthy ecosystem to the crypto world, and do it fast so that projects do not remain in doubt regarding their stay in the country.