The appearance of cryptocurrency is caused by the predictable transformation of the money form. This situation occurred due to the fact that the previous form of money is putting back the production and exchange processes. Also, there was a relevant background of searching the ways of cost savings of money turnover in order to reach the effectiveness of economic operations. Cryptocurrency doesn’t have the real value and doesn’t reflect the general economic situation of the particular country. It doesn’t depend on the banking system, the regulators of financial markets don’t control it. So is the cryptocurrency danger or opportunity to the global market?
Despite lack of government control, cryptocurrency is rather reliable as decentralized program algorithm guarantees its stability. There are various opportunities that cryptocurrency brings to the global economy. Let’s take a look at some of them.
Also, cryptocurrency carries a number of threats and can be dangerous for the economy and government. Among the most efficient are:
The governments of many countries understand the importance of cryptocurrency. Some of them have taken a tough stance. For example, China stated that ICO had a negative influence on the political and economic situation of the country and made all forms of initial placement of coins illegal. Venezuela restricted the actions of miners, while South Korea struck the anonymous trade of cryptocurrency and such operations are taxed heavily. The Reserve Bank of India gave the instruction to stop all cryptocurrency exchange operations.
The members of G20 demonstrates the positive attitude to non-banking financial institutes and states that there are potential advantages of the cryptocurrency in the financial sector in case of risks decrease. But also G20 announced about the creation of taxation system for international electronic payment services.
The USA has a mixed attitude to cryptocurrency. It is allowed to trade or posses the cryptocurrency, the only tax should be paid. But the US government prohibited participation in ICOs and token sales.
The UK government is developing regulations of cryptocurrency and ICOs in order to protect consumers. Nowadays cryptocurrency doesn’t fall under any restrictions, but it can be so in the future.
Japan has a positive attitude to the cryptocurrency and ICOs. The government legalized cryptocurrency for payment, but the companies should run regular audits in this case. Also, there is a tax on profit from the operations with cryptocurrency.
Australia legalized the cryptocurrency as well as Japan. But again there is a set of regulations on cryptocurrency exchanges. Also, the government has developed the guidelines that should be followed during the participation in ICO.
Switzerland has very friendly conditions for cryptocurrency and ICOs. Many start-ups are based in Switzerland aiming to run the ICO. Nevertheless, the Swiss government created the guideless for ICOs in order to protect the investors and financial system.
To sum up, as any other economic phenomena cryptocurrency has its strong and weak points. To our mind, cryptocurrency gives various opportunities for the financial sector of the global economy. It allows conducting the operations in an easier, faster and more reliable way. The program algorithms protect the parties and decrease the operating costs a lot. To avoid the negative effects of operations with cryptocurrencies such as whitewashing, terrorist financing, drug selling business, and arms trading there should be a set of regulations created by the governments. So that there will be some restrictions on privacy and ICOs running. As we can see many countries that have a positive attitude to cryptocurrency have already created such rules in order to protect their financial systems. Nowadays it is hard to create the total decentralization in its absolute form. It should be found a compromise between the total freedom in operations with cryptocurrency and the total prohibiting of them in the particular country and in the global economy as well.
Despite lack of government control, cryptocurrency is rather reliable as decentralized program algorithm guarantees its stability. There are various opportunities that cryptocurrency brings to the global economy. Let’s take a look at some of them.
- The high level of privacy which enables to operates without any restrictions.
- The high level of availability in using them of different age groups or nationalities.
- Decentralization leads to the fact that cryptocurrency doesn’t have control of bank and government so that there are no any financial and legal restrictions and it allows to send and receive cryptocurrency just with the means of the Internet.
- The operation with cryptocurrency requires less operating costs than other money forms.
Also, cryptocurrency carries a number of threats and can be dangerous for the economy and government. Among the most efficient are:
- The cryptocurrency can be used for whitewashing, terrorist financing, drug selling business, and arms trading. Due to its privacy criminal underworld can make transactions without being noticed. So that it will be harder for law enforcement bodies to collect pieces of evidence.
- Scam ICOs create the danger for the investors so that there should be some regulators which protect investors from the purchasing of scam tokens.
- Operations with cryptocurrency don’t subject to tax. Due to cryptocurrency business can avoid taxes and create a serious problem for the government.
The governments of many countries understand the importance of cryptocurrency. Some of them have taken a tough stance. For example, China stated that ICO had a negative influence on the political and economic situation of the country and made all forms of initial placement of coins illegal. Venezuela restricted the actions of miners, while South Korea struck the anonymous trade of cryptocurrency and such operations are taxed heavily. The Reserve Bank of India gave the instruction to stop all cryptocurrency exchange operations.
The members of G20 demonstrates the positive attitude to non-banking financial institutes and states that there are potential advantages of the cryptocurrency in the financial sector in case of risks decrease. But also G20 announced about the creation of taxation system for international electronic payment services.
The USA has a mixed attitude to cryptocurrency. It is allowed to trade or posses the cryptocurrency, the only tax should be paid. But the US government prohibited participation in ICOs and token sales.
The UK government is developing regulations of cryptocurrency and ICOs in order to protect consumers. Nowadays cryptocurrency doesn’t fall under any restrictions, but it can be so in the future.
Japan has a positive attitude to the cryptocurrency and ICOs. The government legalized cryptocurrency for payment, but the companies should run regular audits in this case. Also, there is a tax on profit from the operations with cryptocurrency.
Australia legalized the cryptocurrency as well as Japan. But again there is a set of regulations on cryptocurrency exchanges. Also, the government has developed the guidelines that should be followed during the participation in ICO.
Switzerland has very friendly conditions for cryptocurrency and ICOs. Many start-ups are based in Switzerland aiming to run the ICO. Nevertheless, the Swiss government created the guideless for ICOs in order to protect the investors and financial system.
To sum up, as any other economic phenomena cryptocurrency has its strong and weak points. To our mind, cryptocurrency gives various opportunities for the financial sector of the global economy. It allows conducting the operations in an easier, faster and more reliable way. The program algorithms protect the parties and decrease the operating costs a lot. To avoid the negative effects of operations with cryptocurrencies such as whitewashing, terrorist financing, drug selling business, and arms trading there should be a set of regulations created by the governments. So that there will be some restrictions on privacy and ICOs running. As we can see many countries that have a positive attitude to cryptocurrency have already created such rules in order to protect their financial systems. Nowadays it is hard to create the total decentralization in its absolute form. It should be found a compromise between the total freedom in operations with cryptocurrency and the total prohibiting of them in the particular country and in the global economy as well.
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