Regulation around cryptocurrency trading will need to be improved to bring it into the financial mainstream, experts claim. The Tradefair team brings you the latest in cryptocurrency...
"At present, crypto-assets raise a host of issues around consumer and investor protection, market integrity, money laundering, terrorism financing, tax evasion, and the circumvention of capital controls and international sanctions."
- Mark Carney, Bank of England Governor.
Pressure on cryptocurrency stakeholders to push for improved legislation is increasing, as traders hope this would bring stability to digital currency and trigger a boom in the market. We take a closer look at some of the biggest stories in cryptocurrency at the moment:
BoE signals regulation
The Bank of England's (BoE) Governor Mark Carney recently confirmed that the UK would be implementing cryptocurrency regulations. He said this would help limit the potential for financial crime and bring more stability for traders.
In a speech titled 'The future of money', he said the time had come to hold "the crypto-asset ecosystem" to the same standards as the rest of the financial system.
"At present, crypto-assets raise a host of issues around consumer and investor protection, market integrity, money laundering, terrorism financing, tax evasion, and the circumvention of capital controls and international sanctions," Carney explained.
The BoE Governor also said the Financial Stability Board (FSB) is preparing to make a report at the G20 meeting later this month to evaluate the implications of crypto-assets. This could potentially be the foundation of international regulation on digital currencies.
It comes after China and the European-wide ESMA have already made moves towards cracking down on cryptocurrency trading.
However, Carney also provided caution about hysteria surrounding digital currencies, saying they present a very small risk to overall GDP.
A boom on the horizon?
Following Carney's speech, many financial bodies have expressed their support for any moves towards international regulation of cryptocurrencies.
DeVere CEO Nigel Green has been one of the most vocal advocates for improving standards for digital currency trading.
Writing for the The International Business Times, he said even those who are sceptical of cryptocurrencies should welcome the work being done by regulatory bodies in this area. This is because "digital currencies aren't going anywhere", he stressed, meaning the market is only set to grow.
In a later blog post following the statement from the BoE, Green said better regulation would "provide a sustainable long-term demand for these digital tokens".
"In the longer-term, regulation bolsters certainty, credibility and legal assurance and this translates into confidence and, typically, a long-term upward trend. We saw this was the case for Bitcoin in Japan when Tokyo started regulating the token. The market dropped at first, but eventually it rose."
Eyes set on Ripple effect
Undoubtedly influenced by increased calls for regulation from leading financial figures, other digital currencies are starting to steal the spotlight from Bitcoin. Ripple, one of the less well-known cryptocurrencies, is rumoured to be part of Amazon's latest venture - to launch its own digital currency.
Thanks to the online retailer's vast usership, this partnership could have the potential to see Ripple surpass Bitcoin for a number of reasons. Of course, there's the popularity and stability that comes from the Amazon brand but Ripple has a few benefits of its own.
The digital currency allows for transactions every ten seconds and has a cap of 100 billion XRP, in comparison to Bitcoin's 21 million.