ULC Expected to Create Unified Regulations for Cryptocurrencies and Blockchain Technology
The cryptocurrency and blockchain space have been facing stricter regulations throughout the globe. As the market continues to expand, governments are taking measure to regularise it to avoid any debacle.
Regulations might bring much-needed credibility to the crypto space. The number of scandals and scams have increased in the past several months and forced many countries to take action. For instance, the recent QuadrigaCX Exchange Scandal has forced the Canadian Government to lay down stricter rules for the sector. The scandal saw about 110,000 people lose in total $190 million, when CEO Gerard Cotten suddenly passed away on his honeymoon trip to India.
Following the trend, the United States Uniform Law Commission (ULC) has urged states in the country to avoid setting up rules and regulations based on its model for digital tokens and blockchain assets. The commission stated that it needs to thoroughly study the famous digital assets, and decide whether they can be brought under the prevailing Uniform Commercial Code.
The industry has been divided on the influence and regulations on cryptocurrencies. A certain faction, including academicians, believes that cryptocurrencies must be regulated heavily, to avoid any irregularities. While on the other hand, many industry experts have stated that regulators are a cryptocurrency’s worst nightmare.
However, regularizing crypto space will definitely create a more credible environment. For instance, a recent survey suggested that many cryptocurrency exchanges were manipulating daily volume figures in order to garner more traction for their exchanges, which resulted in a false surge in Bitcoin prices. Regularizing the space will prevent any such future manipulations.
Giant business players like Amazon, JPMorgan, HSBC, Intel, IBM and Facebook have jumped in the game, placing huge bets to become the market leader. JPMorgan became the first bank in the United States to launch its own cryptocurrency. Facebook will also be launching a stable coin, aimed at cross-border payments.
ULC released its statement on Monday, asking the states to hold back from regulating cryptocurrencies. As per the statement, the authority has identified some serious issues in its current regulatory framework, mainly due to the dynamic nature of the growing digital assets market.
This statement from the ULC will impact the legislation of states including Nevada, Oklahoma, and California, who were already considering regulations based on the ULC model. However, not even a single state has implemented regulations based on the flawed ULC model. Uniform Commercial Code (UCC) attorney, Andrea Tinianow, recently criticized the ULC for its stand on cryptocurrency ownership rights.
Cryptocurrencies and its underlying platform, Blockchain technology are innovative technologies, which launched just about a decade ago. At the time of launch, they were considered as mere gimmicks, and many predicted them to die very soon. However, after 10 years, we are still talking about them. In fact, their space has been thriving without any concrete regulations till date.
The year 2018, was the worst year for cryptocurrencies as most digital tokens kept bleeding through the year. Ironically, the market had reached its peak in December 2018, following which it fell on its nose. Even the largest cryptocurrency, Bitcoin, also kept losing for six consecutive months, breaking the trend February earlier this year.
The reality is that the cryptocurrency space required regulations. It will help blockchain and digital tokens to expand their reach significantly. Also, regulations will prevent crypto exchanges like QuadrigaCX Exchange to commit economic crimes.
All that said, existing regulations for traditional assets are not compatible with crypto assets, as both are completely different in terms of functioning and control. What space requires is tailor-made regulations, facilitating stability and credibility to users, instead of restricting operations.
