It seems the world’s governments are about to split into two categories when it comes to crypto finance. Those for cryptos, and those opposed. As some countries are looking for ways to safely incorporate the use of cryptocurrency and form their own, others are still unsure about the implications that may arise with this young form of financial technology.
Jesse Powell, CEO of Kraken, which is the fourth-largest cryptocurrency exchange in the world in terms of volume, fears that a “crackdown” on cryptocurrencies is imminent.
Kraken is considering going public sometime next year as they have experienced record trading volumes in the first quarter. They are aiming to go public with a direct listing, similar to Coinbase’s IPO this week.
With crypto-related companies starting to make their break into the bigger financial markets, it somewhat creates a sense of security in the future of cryptocurrencies. However, some experts believe that these events are only placing urgency upon the need for regulations.
Powell believes that the regulatory uncertainty around cryptocurrency is not going to settle anytime soon. The U.S. Government has recently proposed an anti-money laundering rule that would see private crypto wallet owners undergo identity checks when performing transactions above $3,000.
“Something like that could really hurt crypto and kind of kill the original use case, which was to just make financial services accessible to everyone,” In a comment by Powell.
There have been some recent warnings from various officials about the use of cryptocurrencies for money laundering and the financing of terrorist organizations. U.S. Treasury Secretary Janet Yellen, and European Central Bank President Christine Lagarde, have brought these concerns to light.
Unfortunately, cryptos have been associated with illegal activities due to the pseudonymous nature as all transactions can be seen and tracked, but the information as to who is performing these transactions remains unclear.
It seems that the use of cryptocurrency for illegal activity may be decreasing as a recent study from Chainalyses has revealed that only 0.34% of all crypto transaction volume relates to illicit activity. This is a very big improvement from the 2% the previous year.
Powell went on further in saying “I hope that the U.S. and international regulators don’t take too much of a narrow view on this,”. “Some other countries, China especially, are taking crypto very seriously and taking a very long-term view.”
“I also think it might be too late,”. “Maybe the genie’s out of the bottle and just trying to ban it at this point would make it more attractive. It would certainly send a message that the government sees this as a superior alternative to their own currency.” Powell added.
At this point, it seems that perhaps regulations are needed. Some countries have successfully integrated blockchain technology with their already existing currency. But if common ground cannot be found between governments and the use of cryptocurrencies, we could be seeing many countries imposing bans on cryptos, much like what India is considering at the moment.
On the other hand, these concerns could be seen as the inevitable growing pains that the cryptocurrency industry will be facing throughout its widespread adoption by the global population. We can only hope for the best.