Major economies are rushing to rein in the cryptocurrency industry through regulation amidst bullish market conditions which have once again sparked investors’ interest.
Germany and France are among the latest countries to announce a new set of regulatory measures. Most of the rules are related to Anti Money Laundering (AML) and taxes.
Germany has announced that cryptocurrency exchanges and virtual wallet providers will have to obtain a license from the Federal Financial Supervisory Authority (BaFin) to operate within the country. This is as from next year.
France has, on the other hand, said that it is working on a new regulatory framework that will allow regulated crypto companies to gain certain benefits. According to the drafted laws, the Financial Markets Authority (AMF) is slated to provide financial oversight over the industry.
Companies looking to launch Initial Coin Offerings in France will be required to seek approval from the AMF after complying with the sectored statutes. Only enterprises that are registered in France will be allowed to carry out ICOs.
ICO token issuers will have to present detailed information about the company and its offering to the agency as well as demonstrate both AML and Countering Financing of Terrorism (CFT) compliance.
According to the AMF, private fundraising without its approval is still legal but companies that wish to solicit money from the general public will have to get ratified.
The Impact of Crypto Regulation on Digital Coins
Cryptocurrency regulations across the world are incredibly patchy and it’s hard to tell just how much the crypto market as a whole will react when many of the laws finally kick in.
There is, of course, the likelihood of a dystopian plunge but bitcoin has already shown exemplary resilience when it comes to holding value in the long term under varying conditions.
BTC has been able to counter market attrition in the past seven months and spiked in value by more than 100 percent.
Bitcoin’s main strength lies in its decentralization which makes it hard to control. So far, no single nation has been able to completely suppress its use or circulation.
Centralized coins are, altogether, a different story. They are likely to be directly impacted by legislation. Some are highly susceptible. A brief look at altcoin performance in the past 5 months paints a clear picture regarding the situation. Many have been unable to match bitcoin’s growth rate.
Decentralized cryptocurrencies such as BTC already have a sprawling and growing userbase and are in many cases used as a store of value akin to gold. These factors shield them from a lot of the legislation-induced market mayhem.
Inversely, centralized and privately controlled networks such as Facebook’s Libra and Ripple will continue to be at risk of negative government enactments.
Ripple has already written an open letter to Congress asking it not to stifle the blockchain-centric sector because of one potentially irresponsible actor.
(Featured Image via Pixabay)
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Source: Coin Central