The background
The initial offering of coins on blockchain platforms colored the world red for technology startups around the world. A decentralized network that can distribute tokens to consumers supporting a money idea is both revolutionary and rewarding.
Profitable bitcoin proved to be an “asset” for early investors, giving multiple returns in 2017. Investors and cryptocurrency exchanges around the world took advantage of the opportunity, writing a huge return for themselves, leading to the rise of many online exchanges. Other cryptocurrencies such as Ethereum, Ripple and other ICOs promised even better results. (Ethereum grew more than 88 times in 2017!)
While ICOs attracted millions of dollars into the hands of start-ups within days, governing governments initially chose to monitor the fastest development of fintech, which ever had the potential to raise millions of dollars in a very short period of time.
Countries around the world are considering regulating cryptocurrencies
But regulators have become cautious as the technology and its main effects have gained popularity as ICOs have begun to consider billions of dollars – – – – of funds for proposed plans written in white papers.
At the end of 2017, governments around the world took the opportunity to intervene. While China has banned cryptocurrencies altogether, the SEC (Securities and Exchange Commission) in the United States has highlighted the risks posed by vulnerable investors and proposed treating them as securities.
A recent warning statement from SEC President Jay Clayton, issued in December, warned investors to mention
“Please also note that these markets span national borders and that significant trading in systems and platforms can take place outside the United States. Your invested funds can quickly travel abroad without your knowledge. As a result, risks may increase, including market risk. Regulators such as the SEC may not be able to effectively prosecute bad participants or recover funds. “
This was followed by fears from India, where Finance Minister Arun Jaitley said in February that India did not recognize cryptocurrencies.
A circular sent by the Central Bank of India to other banks on April 6, 2018, asked banks to sever ties with companies and exchanges involved in trading or cryptocurrency transactions.
In the UK, the FCA (Financial Conduct Authority) announced in March that it had set up a working group on cryptocurrencies and would receive assistance from the Bank of England to regulate the cryptocurrency sector.
Different laws, tax structures in different nations
Cryptocurrencies are primarily coins or tokens placed on a cryptographic network and can be traded worldwide. While cryptocurrencies have more or less the same value worldwide, countries with different laws and regulations may provide different returns for investors who may be nationals of different countries.
Different laws for investors from different countries would make calculating the return a tedious and cumbersome exercise.
This would involve investing time, resources and strategies, leading to unnecessary process delays.
The solution
Instead of many countries creating different laws on global cryptocurrencies, there should be a constitution of a single global regulatory body with laws that apply across borders. Such a move would play an important role in improving the legal trading of cryptocurrencies around the world.
Global organizations such as the United Nations (UN), the World Trade Organization (WTO), the World Economic Forum (WEF), and the International Trade Organization (ITO) already play an important role in uniting the world on various fronts.
Cryptocurrencies were created with the basic idea of ​​transferring funds around the world. They have more or less similar value in the various exchanges, except for minor arbitrage.
The global regulatory body to regulate cryptocurrencies around the world is a necessity of the hour and can set global rules to regulate the latest way of financing ideas. Currently, each country is trying to regulate virtual currencies through laws that are being drafted.
If economic superpowers with other countries succeed in building consensus by introducing a regulatory body with laws that know no national borders, then this would be one of the biggest breakthroughs in designing a crypto-friendly world and stimulating the use of one of the most transparent fintech system ever – blockchain.
Universal regulation, consisting of subparts related to cryptocurrency trading, returns, taxes, sanctions, KYC procedures, exchange laws and penalties for illegal hacks, can give us the following advantages.
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This can make calculating profits extremely easy for investors around the world, as there will be no difference in net profits due to the same tax structures.
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Countries around the world may agree to share a portion of the profits as taxes. Therefore, the share of countries in taxes collected will be the same worldwide.
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It can save time on setting up a number of committees, drafting bills, followed by discussions in the legislative arena (such as Parliament in India and the Senate in the US).
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One does not have to go through the strict tax laws of each country. Especially those involved in multinational trade.
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Even companies offering tokens or ICOs would comply with the aforementioned “international law”. Therefore, calculating income after tax would be a great walk for companies
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A global structure would call on more companies to come up with better ideas, thus increasing employment opportunities around the world.
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The law may be assisted by an international supervisory authority or global currency regulator, which may have the power to blacklist an ICO bid that does not comply with the rules.
These are not all the advantages when it comes to a law that will govern cryptocurrencies around the world. There are certain disadvantages also.
It may take time for global financial leaders to come together and draft a law. Discussions and consensus building can be challenging
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States or economies providing tax-exempt entities may not agree to adopt a law that provides for a universal tax policy
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The global supervisor or regulatory intervention in monitoring regulatory developments related to ICO may not work well with some countries.
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Universal law can lead to 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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The law may be the result of the ideas of economically strong states, which could develop it to suit their best interests.
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This law would be centralized with a global regulatory body, unlike cryptocurrencies, which are decentralized by nature.
Conclusion
The world has been together for the better. Whether it’s creating a peaceful world after World War II or uniting for better trade laws and treaties.
The International Trade Organization (ITO), the World Trade Organization and the World Economic Forum have some of the best brains that define the global economy.
They can come together and be part of a body that will determine the economic prosperity of the world. They would help develop global cryptocurrency standards and could be part of the regulatory body that will be the guide and beacon for thousands of ICOs around the world for the better. This may take some time at first, but it will make things easier for future times.