According to the former CEO of Bitmain, Jihan Wu, strengthening control over the cryptocurrency industry will positively affect the development of this market segment. He expressed his point of view at the Asia Tech x Singapore conference.
Cryptocurrency market capitalization has already exceeded $ 1 trillion. More than 10% of US citizens are directly or indirectly associated with digital currencies. The situation is similar in many other countries.
If the authorities of China or other states establish control over the market, then companies and investors who prefer to use dubious schemes forced to leave it. Simply put, fraudulent projects and speculative players will leave the crypto sphere.
Jihan Wu stressed: “The industry’s reputation will be much better with crypto regulation than without it. So I think this kind of repression could be beneficial for the industry”.
Moreover, he noted that crypto companies operating in any country, not just China, themselves interested in cooperation with regulators. As an example, Jihan Wu pointed to Singapore, where his crypto-financial venture Matrixport is based. And whose authorities are pursuing reasonable policies towards market participants. In addition, Wu believes that Singapore should be the center of crypto innovation.
Is the strengthening of control really as positive for the industry as Wu says? Consider the example of the recent repression in China and regulatory pressure on the Binance exchange
In May, three associations under the People’s Bank of China issued a joint notice prohibiting companies from supporting cryptocurrency-related businesses.
Later, Vice Premier of the State Council of the People’s Republic of China Liu He announced the plans of the authorities to take measures regarding the mining of digital assets and trading in bitcoin.
Within a month, the authorities of several Chinese provinces ordered the miners to cease operations. Among them: Yunnan, Sichuan, Qinghai, Xinjiang and Inner Mongolia.
Bitmain has offered its clients assistance in moving abroad. The American mining company Foundry predicted that by the end of June, approximately 90% of Chinese cryptocurrency mining enterprises would turn off their equipment. Due to the prohibitive measures of the authorities against the industry.
In June, the cryptocurrency exchange Binance faced pressure from regulators. The platform began tested in the Cayman Islands. In Thailand they accused it of operating without a license. And in Japan they issued another warning. The Polish regulator called for caution when using the platform.
The UK Financial Conduct Authority has banned Binance Markets Limited from any regulated activity in the country without prior written approval.
Recall that Gemini co-founder Cameron Winklevoss announced plans to beat Binance in the competition amid its problems with regulators.
Many participants in a particular cryptosystem convinced that the authorities strive for absolute control over them, that they in every possible way impede the development of analog money, fight anonymity, etc.
Although Jihan Wu expresses the opposite point of view and considers legislative regulation of cryptocurrencies to be a necessity, due to the fact that cryptocurrencies have become a new stage in the development of the Internet world, a unique phenomenon in the era of information, because they are fundamentally different from national currencies and electronic money.
However, there are undoubtedly difficulties that arise with the state control of cryptocurrencies; several problems can be distinguished.
The first is the issue of accounting and authentication.
The next problem is that in order to fully secure the digital currency at the level of laws, it must be defined as an object of law. Since the rights of the owners of cryptocurrency blocks do not fit any of the existing concepts, including intellectual property.
Nevertheless, all these problems can be solved at the state level within one country. But, in addition to this, there is also the issue of the technical, digital nature of cryptocurrencies, which can only resolved at the international level.
Possible options for international regulation are still rather vague. Time will tell whether the problem of regulation will be transferred to science or business.