by David Drake
Steven Mnuchin, US Treasury Secretary, plans to raise the cryptocurrency regulation issue during the G20 summit next month in Argentina. While he doesn’t think cryptocurrencies could threaten financial market stability, Mnuchin says he’s concerned by the potential use of these currencies to launder money and other crimes.
Mnuchin’s remarks come in the backdrop of CoinCheck’s hacking attack that saw the Japan-based cryptocurrency exchange lose upwards of $500 million in NEM cryptocurrency. The Treasury Secretary plans to pursue cryptocurrency regulation talks during the G20 gatherings, as well as other global meetings.
Akshay Mehra, Founder of Crowd Genie says, “I believe having regulations will actually accelerate the adoption of Bitcoins and Cryptocurrencies by the mainstream financial institutions, which in turn will be a positive for the pricing. Once there is a regulatory umbrella on Bitcoins, the demand should increase to add it as an asset in multiple portfolios.”
But the US isn’t the only country looking to have cryptocurrency regulations featured in the G20 summit. France and Germany have already made official communications with the G20 host, Argentina, seeking inclusion of the issue in next month’s meeting agenda. The two European countries have jointly analysed crypto-related risks. Industry players feel the impact of regulations on the cryptomarket by G20 countries might not be adverse. On the contrary, regulations might increase cryptocurrency adoption.
Gourish Singla, Co-Founder of Shivom says, “Bitcoin regulations in Germany and France will likely not have dramatic impacts. Both countries still have enormous potential left for crypto assets to continue the current increase in adoption. Many people in Europe are still not feeling comfortable using cryptocurrencies, and having clear regulations in place, with governments explaining the risks and finding rules that reduce the risks, can also have a positive impact.”
However, cryptocurrency might view efforts to regulate digital currencies differently. “It may be different for existing traders who feel many governments are mainly acting in their own (bad) interests to prevent a crypto-revolution from becoming mainstream. In any case, no person can adequately regulate cryptocurrency, as no central authority controls all decentralized networks. Most likely people, will still trade digital currencies irrespective of government approval. Consequently, the logical approach for governments may be trying to reducing the risks rather than banning Bitcoin and other cryptocurrencies,” Singla continues to say.
If G20 countries discuss cryptocurrency regulations next month, it won’t be the first time the discussion takes place on a major global platform. Meeting in Germany in 2015, G7 countries agreed to back appropriate regulations for cryptocurrencies.
Should G20 countries agree on modalities to regulate cryptocurrencies, Vincent Jacques, Chaintrade CEO, thinks the move will temporarily affect Bitcoin prices.
“Regulations tend to have a temporary effect on Bitcoin’s price. A large number of people automatically see regulations as bad news and then sell their holdings before even researching the details. Then the panic sales add to the red candles and it turns into a rough week for traders. However after a small period of time the severity of the regulations are usually revealed to be mild or the market simply stops caring entirely,” he says.
This won’t be the first time the market is responding to crypto regulations. “In October 2017 there were news articles of Russia banning digital currencies entirely but the market was so fed up with these headlines the price rose steadily anyway. Bitcoin and the rest of the market will continue to grow with or without government permission. I feel we often forget that it’s not the government bodies in the world that control the price of crypto but the people,” states Jacques.
Disclaimer: David Drake is on the advisory board for most of the firms mentioned or quoted in this article.