Cryptocurrency regulations should be dynamic

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The current regulatory bottlenecks in India highlight the importance of having a dynamic system that tracks the evolution of the crypto space. Governments from around the world are constantly trying to create regulatory frameworks for crypto, however, the regulations always seem to fall short of what is required.

The real issue is that the crypto industry is still new, constantly changing, and very fast-paced. The technology and investment pattern also varies from everything in the legacy market.

This means that the process employed by the government has to be completely different. Instead, as we've observed in many countries, crypto seems to be treated like any other asset.

For example, in some countries, staking rewards are treated as income and taxed as such, whereas in reality, it's much different. For starters, in the legacy market, income is in fiat and taxed in fiat but crypto is in crypto and then taxed in fiat.

Back to India

India is in the process of creating a regulatory system for crypto within the country. Through this process, their long-fought battle against crypto might be coming to an end.

On one hand, it's good news but on the other hand, I fear that the regulatory move will be somewhat antagonising. Countries like India that have had beef with crypto for a while hardly bring crypto-friendly policies for their citizens.

Governments have done all they can to fight crypto, and regulations seem to be their next frontier. Through the creation of regulations, they will most likely create more outlaws through their policies.

Going back to India, there was talk about potentially pushing forward a bill to their parliament to institute certain crypto regulations. However, as covered by Coindesk, the bill wasn't even on the agenda for the final sitting of the year.

There are informal conversations about something still being done concerning crypto regulations but I really doubt that will be the case. As Coindesk sited in one of their recent articles;

This does not completely rule out the possibility of crypto regulations in the near future and even before the next session of parliament. The government has the option of promulgating an ordinance instead of presenting the bill in parliament first if it determines that the need has arisen.

It is still very unlikely that the bill will actually be discussed or passed this year though. One of the reasons mentioned for the absence of the bill in the agenda is that there is a need to properly understand crypto before creating a regulatory framework for it.

Same old story

In India, much like most countries of the World, there seems to be a lack of understanding about the various aspects of the cryptocurrency industry. A quote that was gotten from Senior government official in India and gotten from the The Economic times stated that;

“After several rounds of discussions at the highest levels, it was felt that any legislation surrounding cryptocurrency must be in tandem with a global framework which is still evolving. It might be a better strategy to wait and observe how this space evolves globally.”

Many countries still view the entire industry as a pump and dump sector with no fundamentals. So in most cases, the laws surrounding crypto tend to seem to be crude.

Also, one of the biggest issues with crypto regulations is the Government's insistence on ignoring crypto as an asset but possessing a willingness to tax it in its fiat value.

I don't know much about running a country and don't claim to but the obvious solution for a lot of the crypto regulatory problems will be to simply accept crypto and participate in the industry like everyone else.

The sooner governments realise that accepting crypto is the best way to regulate it, the faster they'll sort out the problems. Until then, they'll continue fighting a pointless battle, creating outlaws and creating an enabling environment for creative accounting to circumvent policies.

In summary

Every day we're reminded about how early we are and how much learning authorities have to do to catch up. El Salvador is buying Bitcoin in droves and this move seems like the inevitable transition for other countries.

Just like India, many countries actually have a lot of learning, unlearning, and relearning to do. Also, the fact that the industry is constantly changing means that crypto regulations have to be revised regularly.

The only way countries can actually achieve this is to constantly stay on top of proceedings and developments. So whether it's setting up a government agency for learning or just participating in some capacity, a decision has to be made to ensure crypto regulations are keeping up with the times.


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3 comments
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Every day we're reminded about how early we are and how much learning authorities have to do to catch up.

First they ignore crypto, then they laugh at crypto, then they fight crypto, then decentralisation will win.

Crypto is a peaceful war against corrupted governments!

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crypto regulations should be according to existing policies in the country, if at all there should be regulations.

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