Suppose regulators just consider bitcoin when instituting a definition to set a regulatory framework. What would then happen in the event that another crypto ascends that has the same affect and user attributes as bitcoin, but because of its functionality, would lie outside of the jurisdiction of the leading regulatory body? There is no clear answer to this question, and it reiterates the problem of pigeonholing bitcoin or any crypto into something that it is not, even though it may hold certain similar characteristics. Secondly, the new “2nd Generation” cryptos either do not engage the mining process or use a variation of mining tied into a proof-of-work algorithm.
Too much regulation, especially in a finance-related field such as cryptos, would have the tendency to simply spur innovation to circumvent controls. Who and what will regulate these cryptos will depend largely upon how they come to be defined. Any ideal or framework to prevent speculative attacks on currencies based on faulty or over burdensome regulation could very well exacerbate the problem that the regulation seeks to correct. These methods by which nations control the inflow and outflow of money across their borders are commonly known as capital controls.
This should be a clear signal that the sector is booming, but the numbers are deceptive. According to a CNBC report, more than 800 of those are essentially dead—that is, they're worth less than a penny. Not to mention reports of rampant scams and fraud in the initial coin offering market, and other signs of trouble for the sector.
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Bitcoin and Cryptos have far more potential than the traditional banking and stock markets where these professionals can truly contribute to its growth. When I researched this, I realised that the people who made the bill seemed to have not consulted anyone from the industry. No finance professionals, FEMA lawyers, Chartered Accountants or economists were consulted.
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