Cryptocurrency can become a mainstream currency if it is regulated by policymakers and regulators. Crypto adoption is impossible without regulation as it ensures the trust of people.
The governments of several countries are devising a clear-cut framework to regulate cryptocurrency and related products. For instance, the European Commission (EC) is the latest body to roll out comprehensive regulations for digital assets and stablecoins. It is not just important for digital assets but also for the state as it helps in the growth of the digital industry.
Absence of Regulation is a major Hindrance in Adoption
Many people in the crypto community are having the view that the absence of proper rules and regulations is a major hindrance in crypto adoption across the world. To reach critical mass, the availability of security and trust is important, which is not possible without policymaking.
This year, banks and regulators started to think about regulating digital assets instead of a ban. In the past, various countries had banned cryptocurrency. India is a big example that banned cryptocurrency in the whole country, and it was a decision of the central bank. But later, the Supreme Court of India removed the ban, but still, there are no clear rules of crypto usage in India.
Regulation by the European Commission and the US Body
European Commission has also proposed a regulatory sandbox for crypto-assets and stablecoins. “The bespoke regime will introduce specific requirements on e-money tokens, significant e-money tokens, asset-referenced tokens and significant asset-referenced tokens in order to address the potential risks to financial stability and monetary policy transmission these can present. Finally, it will address market fragmentation issues arising from the different national approaches across the EU,” the EC said.
Recently, the US regulatory body, the Conference of State Bank Supervisors, announced a regulatory framework for cryptocurrency companies, payment companies, and money service businesses. According to this framework, payment companies, such as Western Union, or PayPal, and crypto-related companies are subjected to comply with strict Anti-Money Laundering (AML) policies.
Regulation of cryptocurrency is the only way leading towards growth and adoption on a large scale.