Background
Initial coin offerings on blockchain platforms have painted the world red for tech-startups around the world. A decentralized network that can allocate tokens to users who support an idea with money is revolutionary and rewarding.
Profit-spinning Bitcoin has become an ‘asset’ for early investors offering multiple returns in 2017. Investors and cryptocurrency exchanges around the world capitalize on the huge return opportunities for themselves leading to the rise of multiple online exchanges. Other cryptocurrencies such as Ethereum, Ripple and other ICOs have promised better results. (Ethereum rose more than 88 times in 2017!)
While ICOs landed millions of dollars in the hands of startups in a matter of days, ruling governments initially chose to focus on the fastest fintech developments that had the potential to raise millions of dollars in a very short period of time.
Countries around the world are considering regulating cryptocurrencies
But as the technology and its underlying implications gained popularity, regulators became wary as ICOs began raising billions of dollars worth of funding.
It was in late 2017 that governments around the world seized the opportunity to intervene. Although China has completely banned cryptocurrencies, the US SEC (Securities and Exchange Commission), has highlighted the risks to risky investors and proposed treating them as securities.
SEC Chairman Jay Clayton’s recent warning statement released in December notes that investors are cautioned,
“Please also recognize that these markets span national borders and that significant transactions may occur on systems and platforms outside the United States. Your invested funds may travel abroad quickly without your knowledge. As a result, risks, including market risk, may be amplified. Regulators, such as the SEC, effectively Bad actors will not be able to pursue or recover funds.”
This was followed by concerns in India, where Finance Minister Arun Jaitley said in February that India does not recognize cryptocurrencies.
A Central Bank of India circular on April 6, 2018 to other banks asked banks to sever ties with firms and exchanges involved in trading or dealing in cryptocurrencies.
In Britain, the FCA (Financial Conduct Authority) announced in March that it has formed a cryptocurrency task force and will seek help from the Bank of England to regulate the cryptocurrency sector.
Different laws, tax structures across countries
Cryptocurrencies are mainly coins or tokens launched on a cryptographic network and can be traded globally. Although cryptocurrencies have more or less the same value worldwide, countries with different laws and regulations can provide differential returns for investors who may be nationals of different countries.
Different laws for investors in different countries can make calculating income a tedious and cumbersome exercise.
It involves investment of time, resources and techniques which leads to unnecessary stretching of processes.
solution
Instead of many countries enacting different laws for global cryptocurrencies, a uniform global regulatory authority should be formed with laws that apply across borders. Such a move will play an important role in increasing legal cryptocurrency trading around the world.
Organizations with global objectives like UNO (United Nations Organization), World Trade Organization (WTO), World Economic Forum (WEF), International Trade Organization (ITO) are already playing an important role in bringing the world together on various fronts.
Cryptocurrencies were formed with the basic idea of ​​transferring funds around the world. They have more or less the same value across exchanges except for negligible arbitrage.
A global regulatory authority to regulate cryptocurrencies worldwide is the need of the hour and may create global rules to regulate new modes of financing concepts. Right now, every country is trying to regulate virtual currency through legislation, which is still being drafted.
If economic superpowers with other countries can build a consensus by introducing a regulatory authority with laws that know no national borders, it will be one of the biggest advances towards designing a crypto-friendly world and encouraging the use of the most transparent fintech. Blockchain in System Ever.
A universal regulation with subsections on cryptocurrency trading, returns, taxes, fines, KYC procedures, exchange laws and penalties for illegal hacks could bring us the following: facilities.
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This can make the calculation of profits very easy for investors all over the world, as there will be no difference in net profits due to uniform tax structure.
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Countries around the world can agree to share a certain portion of profits as taxes. So countries’ share of tax collected will be uniform across the world.
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Time can be saved by forming many committees, drafting bills, and deliberating in legislation (like the Indian Parliament and the US Senate).
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Not every country has to go through strict tax laws. Especially those involved in multinational businesses.
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Even companies offering tokens or ICOs will comply with the said ‘international law’. Therefore, accounting for post-tax income will be a cake walk for the company
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A global framework would invite more companies to come up with better ideas, thereby increasing employment opportunities around the world.
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The law may be supported by an international watchdog or global currency regulator, which may have the power to blacklist an ICO offering that does not comply with the rules.
It’s not all benefits, when it comes to a law that will govern cryptocurrencies around the world. Sure there is difficulty For example.
It may take time to get the world’s financial leaders together and draft a law. Negotiating and bringing them to consensus can be challenging
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Countries or economies offering tax-free structures may not agree to adopt laws that provide for a universal tax policy.
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The intervention of global watchdogs or regulatory authorities in monitoring regulatory developments related to ICOs may not go down well with some countries.
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Universal law can cause the world to be divided into groups. Countries that don’t support cryptocurrency like China can’t be part of it.
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The law may be the brainchild of economically powerful countries who can design it for their best interests.
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Unlike cryptocurrencies, which are decentralized in nature, this legislation will be a centralized one with a global regulatory body.
Conclusion
The world has come together for good. Whether building a peaceful world after World War II, or coming together for better trade laws and agreements.
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 an organization that will define the economic prosperity of the world. They will help draft cryptocurrency rules globally and be a part of the regulatory body that can better guide and be a beacon for the thousands of ICOs around the world. It may take time initially, but will make things easier later on