Background
Initial coin offerings on blockchain platforms have painted the world red for tech startups around the world. A decentralized network that can allocate tokens to users who support an idea with money is both revolutionary and rewarding.
Profitable Bitcoin became an “asset” for early investors in 2017, yielding huge returns. Investors and Cryptocurrency exchanges all over the world took advantage of the opportunity to make huge profits, leading to the rise of many online exchanges. Other cryptocurrencies such as Ethereum, Ripple and other ICOs have promised better results. (Ethereum increased more than 88 times in 2017!)
While ICOs have put millions of dollars into the hands of startups within days, ruling governments have chosen to focus first on the fastest growing fintech, which has the potential to raise millions of dollars in a very short period of time.
Countries all over the world are considering regulating cryptocurrencies
But regulators have been cautious as the technology and its underlying implications have grown in popularity as ICOs have begun to discuss billions of dollars worth of funds — all over proposed plans written in white papers.
It was in late 2017 that governments around the world seized the opportunity to intervene. While China has banned cryptocurrencies outright, the SEC (Securities and Exchange Commission) in the US has highlighted the risks it poses to vulnerable investors and suggested treating them as securities.
SEC Chairman Jay Clayton’s latest cautionary statement issued in December warned investors,
“Please also note that these markets span national borders and that significant trading may occur on systems and platforms outside of the United States. Funds you invest may travel abroad quickly without your knowledge. As a result, risks, including market risk, may be increased. Regulators such as the SEC will not be able to effectively prosecute bad actors or recover funds.”
This was followed by concerns from India, where Finance Minister Arun Jaitley said in February that India does not recognize cryptocurrencies.
In a circular sent by the Central Bank of India to other banks on April 6, 2018, banks were asked to cut ties with companies and exchanges engaged in cryptocurrency trading or transactions.
In Britain, the FCA (Financial Conduct Authority) announced in March that it had created a cryptocurrency task force and would seek help from the Bank of England to regulate the cryptocurrency sector.
Different laws, tax structures between countries
Cryptocurrencies are essentially coins or tokens that are traded on a cryptographic network and can be traded globally. Although cryptocurrencies have more or less the same value around the world, countries with different laws and regulations can provide different returns for investors who may be citizens of different countries.
Different laws for investors from different countries would make calculating returns a tedious and difficult exercise.
This will involve the investment of time, resources and strategies, leading to unnecessary prolongation of processes.
The solution
Instead of multiple countries developing different laws for global cryptocurrencies, there should be a constitution of a single global regulatory body with laws that cross borders. Such a move will play an important role in increasing legal cryptocurrency trading around the world.
Organizations with a global purpose, such as the UN (United Nations), the World Trade Organization (WTO), the World Economic Forum (WEF), and the International Trade Organization (ITO), are already playing an important role in bringing the world together on various fronts.
Cryptocurrencies have been formed around the world with the basic idea of money transfers. They have more or less similar value across exchanges except for slight arbitrage.
A global regulatory body that regulates cryptocurrencies worldwide is the need of the hour and can set global rules to regulate the newest way of funding ideas. Currently, each country is trying to regulate virtual currencies through legislation, and the process of their preparation is underway.
If the economic superpowers can build a consensus with other countries to introduce a regulatory body with laws that recognize no national boundaries, it will be one of the biggest advances towards designing a crypto-friendly world and increase the use of one of the most transparent fintechs. the system is always blockchain.
Universal regulation with subsections on cryptocurrency trading, revenues, taxes, fines, KYC procedures, exchange-related laws and penalties for illegal hacks can give us the following. advantages.
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This can make calculating profits much easier for investors worldwide as there will be no difference in net profits due to uniform tax structures.
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Countries around the world can agree to share a certain portion of profits as taxes. Thus, the share of countries in collected taxes would be uniform throughout the world.
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Time spent on setting up multiple committees, drafting bills, followed by debates in the legislative arena (such as the Parliament in India and the Senate in the US) can be saved.
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You don’t have to go through the heavy tax laws of every country. Especially those involved in multinational trade.
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Even companies offering tokens or ICOs will comply with the said “international law”. Therefore, calculating post-tax profits would be a cake walk for companies
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The global structure will require more companies to come up with better ideas, thereby increasing employment opportunities worldwide.
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The law could be helped by an international watchdog or regulatory body for global currencies with the power to blacklist an ICO offering that doesn’t comply with the norms.
It’s not all advantages when it comes to a law that will govern cryptocurrencies worldwide. There is certain disadvantages also.
Getting the world’s financial leaders together and drafting legislation can take a long time. Discussions and bringing them to consensus can be difficult
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Countries or economies that provide tax-free structures may not agree to adopt a law that provides for a universal tax policy.
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The intervention of a global watchdog or regulatory body in monitoring ICO-related regulatory developments may not go down well with some countries.
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A universal law may result in the division of the world into factions. Countries that do not support cryptocurrency, such as China, may not be part of it.
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A law can be the idea of economically powerful states and they can frame it in their own interests.
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This law would be a centralized law with a global regulatory body unlike cryptocurrencies which are decentralized in nature.
The result
The world is a better place. Whether it’s creating a peaceful world after World War II or coming together for better trade laws and treaties.
The International Trade Organization (ITO), the World Trade Organization and the World Economic Forum have the best minds defining the global economy.
Together, they can become part of an entity that will determine the economic well-being of the world. They can be part of a regulatory body that will help develop global cryptocurrency norms and be a guide and beacon for the betterment of thousands of ICOs around the world. It may take time in the beginning, but it will make things easier for future times.