Regulation: The Final Frontier For Mainstream Crypto Adoption
Since Bitcoin entered the market in 2008, cryptocurrencies and consequently the underlying technology, blockchain, have become deeply ingrained in the vocabulary of the tech community. Often lauded as the most influential technology of the 21st century, one question remains: why hasn’t it seen widespread adoption yet?
Lack of regulatory clarity represents by far the most significant roadblock for crypto and blockchain pioneers. Digital assets and blockchain present new challenges to regulators looking to protect consumers and markets, but the rigidity with which regulators in the world’s major economies have approached them have only served to stifle innovation and growth.
In order for the space to move beyond the fringes into the mainstream realm, government regulators must strike a delicate balance between bringing much-needed rules and regulations to projects whilst still encouraging innovation. Uncertainty and inconsistency in the treatment and view of digital assets by different government bodies across the globe has created confusion for the entire ecosystem. At CRUXPay we believe it is imperative for cryptocurrency and blockchain leaders to educate policymakers on the change of pace of decentralised technologies and crypto-assets, and the role they will play in the future global digital economy. Cryptocurrency has a bad rep among mainstream audiences. It emerged from systemic problems in our society. Proponents of the nascent technology should emphasise that the crypto sector is not trying to threaten the economic system or replace the role of central banks — instead create a new dynamic in which the crypto economy and the traditional economy can function in parallel.
The regulatory stonewall for blockchain and crypto innovators was the norm across major economies for the majority of the last decade. However, the narrative on digital assets and blockchain is shifting. The announcement of Facebook’s Libra last year successfully goaded nation-states into seriously considering the development of their own digital currencies. Governments are starting to recognise the opportunity cost of inaction — a continued “brain drain” to friendlier jurisdictions like Singapore and Switzerland. The first large jurisdiction to embrace this new technology meaningfully and develop a regulatory model that encourages innovation while protecting consumers will reap the rewards in jobs and economic growth.
Take India for example, the development of government definitions pertaining to crypto would help engender a clear legal stance on crypto and forgoing the economic potential growth could be a regrettable missed opportunity for the country. VC firms have invested upwards of 400 billion Rupees in blockchain startups globally. According to a recent CIO report, India received less than 0.2% of these investments while Singapore — a notable blockchain hub— attracted 53 million Rupees, in the first nine months of 2019 alone, as a result of investments in the local fintech economy. We believe, with the right amount of industry and government participation, India could become a leader in adoption in the next five years. The Indian ecosystem has the potential to shift cryptocurrency from a speculative asset class to driving real-world utility through commerce and micropayments. India has a large pool of talent. We must make sure the enormous potential of IT developers and entrepreneurs in India does not remain underutilised and untapped for the next digital revolution.
In general, technological advancements take a long time to mature and reach a form stable enough to be introduced to the market. Even if a technology seems to hold the potential to stimulate an increase in productivity and overall quality of life, it must first embark on a trial and error phase where enterprises and emerging disruptors identify and address implementation challenges. World leaders will need a level of flexibility and openness that we have not yet seen. In the coming year, central bankers, policy-makers, and blockchain leaders – will decide what the future of the digital economy will look like. At CRUXPay, we hope to see governments around the world embrace Decentralised Ledger Technology (DLT) and decentralised finance. Watch this space.