Cryptocurrencies are showing renewed interest and the list of supporting businesses, regulators, and developers has been growing at a very quick pace. What hasn’t really been keeping up, however, is regulation itself – and for a good reason.
An Infrastructure in its Infancy
Due to how quickly cryptocurrencies have taken off in recent years, it’s very easy to forget that they really aren’t that old yet. Bitcoin itself was released in 2009, a little over ten years ago, but even it didn’t start catching on until years later. And it wasn’t until 2017 before most people had even heard of it. It was available in between those years, but the number of people who knew what it was or had any interest was still minimal, and we could argue that while there are pushes to take blockchain technology mainstream, it’s still a far way off.
The reason why this is so important is because regulation is not a quick process. Laws take time to come to fruition, and there’s a lot of effort and research needed if they are going to be enacted in a meaningful and fair way. It’s easy to think that regulators just need to come up with quick guidelines on what is and is not allowed but that’s not so simple. When these guidelines are set, they set precedence. If it just so happens that things were rushed, things could be in motion that are either favorable or not, leading to unhappy people. Finding the balance and a good way to handle things is what ends up taking time to ensure nobody is hurt in the process.
An Intricate System
Not only is cryptocurrency in its infancy stage, but it’s also extremely intricate. This isn’t simply a system where people can throw in money, transfer it, and withdraw it. The blockchain itself is still being expanded on and there are exciting new applications being developed constantly. What’s available right this second vs. a year from now is a massive difference, and things are developing at such a fast rate that it’s proving there’s really no limit to what can be done via blockchain technology. From banks and manufacturers to individuals and medical applications, it is amazing what’s going on in the world now. And this is a huge hurdle when it comes to regulation because there’s just no telling what tomorrow is going to look like. While something could be allowed today, a massive change could take place tomorrow that nullifies the previous ruling due to unforeseen circumstances. Regulators have to take this into consideration before enacting laws and rules.
What to Expect in the Future
We are already seeing some countries open up their doors to blockchain technology. Some, for example, have moved to treat Bitcoin as cash, rather than as a commodity. Some have stated that they won’t regulate it at all. Others, such as the U.S., appear to be working towards the middle ground between allowing everything and ensuring that it isn’t destructive to existing protocols/laws and doesn’t infringe on anyone else’s rights. As time goes on and the cryptocurrency sector keeps maturing, we will see regulation start to flow a lot better. For now, suffice it to say that “gray area” is a very common place to step in the sector because there’s not a lot of black and white when it comes to regulation yet.