With cryptocurrencies rapidly emerging as an alternative to fiat money, even major corporations jumping into the fray. IMF chief Christine Lagarde too has joined the ranks of governments and central banks worldwide calling for cryptocurrency regulation. While bankers and financial bigwigs laughed off the idea of cryptocurrencies ever becoming a serious financial instrument just two years ago, with growing popularity and public interest, professional investors, corporations and businesses are warming up to the idea of cryptocurrencies as a regulated and legal financial instrument.
Regulations – protecting investor interests
With a market cap hovering around half a trillion dollars, cryptocurrencies are growing too big to be unregulated. Though the cryptocurrency landscape has been relatively scandal free, thanks to the rigorous standards practiced by exchanges and service providers, governments worldwide have started expressing concerns about possible money laundering and financing of terrorism, thanks to the pseudo-anonymous nature of cryptocurrency transactions.
IMF chief Christine Lagarde echoed these concerns, in comments to CNN money at the World government summit in Dubai, when asked about cryptocurrencies. Lagarde also stressed that the focus of regulations should be on the activities and services provided by cryptocurrency businesses rather than on individual entities, unlike the post 2008 global recession reforms focused on specific failed banks as they failed to set operating standards across the industry. It is notable that Miss Lagarde, one time cryptocurrency cynic, has also told banker audiences to brace for potential disruptions of the financial realm by cryptocurrencies.
While some cryptocurrency enthusiasts welcome the move to regulate the space, others are wary of increasing government involvement and monitoring of what was conceived as money free from state control. While it can’t be disputed that cryptocurrencies need a legal framework, it remains to be seen what form the regulations will ultimately take.