As the cryptocurrency and Blockchain are moving into mass adoption in South Africa and the number of people dipping their toes into cryptocurrency stream, regulators along with the investors are also heading towards the industry sensing the potential.
Cryptocurrency, the new decentralized digital assets has threatened countries all over the world, for one or the other reason. With The development of Bitcoin, the leading cryptocurrency that claims to offer the decentralized peer to peer network and also other ICOs has bought the response for regulators into different areas to regulate them.
The fear associated with an asset:
However, the answer to the question of why they are regulating cryptocurrency lies in the idea of the currency called ‘DLT’. It is the acronym for ‘decentralization ledger technology’ which suggests that the asset class remains out of the domain of government and giving all the power to people holding them. This is an important fear which is forcing governments to regulate this world and design a transparent framework for their jurisdiction.
Lack of control:
Keeping things into control is an important objective for every government ruling a country. That is why; laws makers ought to put laws for preventing issues, social unrest, dangers, ensure peace within the country. Similarly, the regulated system of banking that can effectively fight money laundering, trade exchanges, terrorism, scams and frauds matters is putting an example for why crypto regulations are necessary.
Another reason that seems to put regulations into space is the mystery behind the decentralized virtual currency that keeps them away from the control of the government. This makes the currency volatile and irresistible to huge speculations of the prices, affecting the market diversely.
Besides the fear, cryptocurrency also tempt government as an extra source of income. Cryptocurrency like any other investment is categorized under the tax category, so for every profit in cryptocurrency world government laid taxes on the investors. However, the feature of Blockchain that only gives access to service providers and other individuals on the network is forcing the government to legitimate crypto tax and in turn legitimate cryptocurrency with a proper regulatory framework.
With this being said, we can see that though the cryptocurrency had gained huge popularity in Africa during these years, there are still many problems that are needed to be worked upon. Above are the important reasons why the crypto space awaits regulation
What do you think are the possible reasons for the government regulating cryptocurrency? Share them in the comment section below.