Cryptocurrency Regulation Ideas
Blockchains and cryptocurrencies are not going anywhere; therefore, it is very crucial for governments to regulate it appropriately. Below are six steps the UK government can take to shield consumers without repressing innovation:
1. Settle the taxes
Without a token, blockchains do not function and tokens should be transacted in fiat as well as out (currencies supported by the government, such as the US dollar). It signifies that an opportunity will always be available to profit (in regard to fiat), therefore, HMRC should make its stand clear. In the United States, the tax laws of 2018 made it clear when you need to pay crypto capital gains. A major change is that transactions of crypto-to-crypto are now taxable. Is this applicable in the UK also? According to CryptoTax.uk, which is a specific guide from the UK, ‘tax may apply to you’ on these kinds of trades; however, currently this is not a certainty. With the Proof-of-Stake introduction and Masternodes in Dash what occurs when you gain a crypto-dividend? Is it taxed? It would be good to know.
2. Regulate Exchanges
Nearly all foreign exchange passes through currency houses or banks. How you use it after this is your decision. It should not differ from the crypto concept. If you are an expert trader this does not apply to you, that is, the type of person who would rank himself four on a list such as this one. Each of your transactions needs to go through a regulated exchange. Since the fiat flow to crypto and vice-versa is mainly via exchanges, it is going to be simpler to eliminate illegal acts and make sure that tax is paid. But, for that to take place, we first require banks to set up accounts for exchanges. Currently British banks are rejecting cryptocurrency exchanges. They are even closing accounts for customers for wiring to an exchange. Therefore, even if they want to be UK based, exchanges need to open accounts in European countries, which is the mainland. These countries are Estonia (Coinbase) or Slovenia (Bitstamp). According to banks, this is reasonable. If there are no strict regulations, they worry that crooks may use the money for money laundering or on the dark web. If they join that activity, they may incur fines or shut down. It is not worth it at all. It is the reason why regulating the exchanges is the answer. If that occurs, then the major banks will be accommodating, making things easy for exchanges as well as investors. It will be beneficial for banks also, as they can restrict customers from shifting to competitors who are more daring. This plan would be helpful also for the UK, where the economy is concerned. The casual attitude of the UK to cryptocurrency has signified that the most significant exchanges in the globe are in Japan, the USA, (and China before the state prohibited them). Just lessening the conflict would be very effective in introducing this financial activity to the UK.
3. Set up an ICOs Framework
You have studied our guide titled ‘Should You Launch An ICO? But, it is probable that you are still unable to tell whether an ICO is genuine or not. If you have ever glanced at a whitepaper, it is likely that the first paragraph put you off. Individuals are putting their money in ICOs simply because it is the trend and they do not have a clue how their money will be used. The result will not be favorable. ICOs are important in the world of decentralization. Picture a Twitter that was formed that is not as terrible, that is financially supported through the pre-sale of usernames, facilitated by the blockchain. Users would manage to make decisions on how it is run. But, even though an ICO can be useful, it will not be if no product is available and its team is not genuine. A set of cryptocurrency regulations that is well defined on what is suitable or not needs to be formed. In September 2017, according to the FCA, ‘an ICO should be defined as e-money issuance, deposit- taking, contract for difference, collective or derivative investment scheme. So who is behind the raising of money? What method is used for reimbursement if they do not perform? What should be done in case of control issues? Challenger Banks should experience many hoops to verify they can keep large quantities of customers’ cash. Do new blockchains differ? But, it would be extremely difficult for the state to regulate each ICO that is available.
4. Allow Exchanges to Control ICOs
This presents two advantages; it is a different business model for the exchanges as well as a main area of control for decreasing illegal act. The projects determine the reputation of the exchanges; therefore, they shall be incentivized to be thorough. In case an exchange wishes to provide ICOs, according to the regulation, they should make sure the ICO adheres to particular criteria. The tech and team should at least be audited and history checked. Perhaps, the whitepaper needs to be checked using software for plagiarism, just to be sure. Where the customer is involved, any person who wishes to invest needs to go through the procedures of Anti-Money Laundering and Know-Your Customer. (It may seem tedious, but it takes place already each time you use AirBnb to book an apartment). When these two steps are taken, they greatly lower swindles on both sides. You cannot stop individuals from making silly moves, but you can tell them to be cautious. Therefore, every procedure for ICO investment needs to begin with a quiz to find out whether the individual comprehends what may happen to their cash. Sites for Equity crowdfunding do it. ICOs do not vary much, so they need to do the same.
5. Implement an operational team of blockchain professionals, policy wonks and economists
Have you ever heard someone comment that, ‘Bitcoin is great but not so great?’ That is untrue and an indication that they do not comprehend it. It is a different sector and you can only take the appropriate steps if you understand the subject. It is understandable, as we do not completely comprehend it either. Whatever the case, instead of letting banks and investors to remain unenlightened, it would be wise to present a report by the end of the first quarter of 2018 that provides a clear idea of the opinion of the UK on cryptocurrencies. Already, France openly discusses ICOs. If the next likely Internet experiences a brain drain, this will not help anyone.
6. Avoid innovating yourself
The CEO & Founder of AngelList and CoinList, Naval Ravikant, thinks that the world just has a few hundred engineers who have the skills to write Internet protocols like blockchains. It applies to investing. Already, it is hard to get security professionals and software engineers; getting blockchain protocol designers whose background is almost impossible to check. Blockchains entail more than code. They mix economics/game-concept, mathematics, engineering and philosophy. There is a purpose why Satoshi Nakamoto took up to 2009 to form Bitcoin. It is difficult to make it ideal and they did not. If the state wishes to use Blockchains, it needs to search outside to get skills instead of promoting within. Most important, do not use in Brexit under any circumstances.