Circle and the European Central Bank consider that cryptoactives need regulation
In September 2017, JP Morgan’s CEO, Jaime Dimon, said that cryptocurrencies were a fraud. A year and a half later, JP Morgan launched its own cryptocurrency, JPM Coin, the second dollar-backed cryptocurrency of a major bank. The adoption of blockchain and cryptoactives keeps its course, but, for that reason, some analysts believe that this market should be regulated.
New things, sometimes, comes from surprise and fulfills a purpose that then changes. In 2009, Bitcoin came with the attraction of being a decentralized digital currency but now the European Central Bank (ECB) and other entities consider essential the presence of an organization that guarantees the security of cryptocurrency investments.
One of the executives who has this opinion is the General Manager of the crypto-finance company Circle, Jeremy Allaire, who commented that the crypto-space needs a “regulatory certainty” and believes that the current definition of cryptocurrency is “too broad”, so that it should be studied, he said recently by means of a blog post.
Allaire’s statement comes after the Poloniex crypto-exchange company, which is owned by Circle Internet Financial. It says it will make decisions due to lack of regulation for that sector in The United States. The Exchange performed a “geo-permeation” of nine different currencies for customers located in the United States, ceasing to offer Ardor (ARDR), Bytecoin (BCN), Decred (DCR), GameCredits (GAME), Gas (GAS) ), Lisk (LSK), Nxt (NXT), Omni Layer (OMNI) and Augur (REP) for customers in The United States.
Some Consider Cryptos as Values,
Others do not
In its publication, Allaire affirmed that digital assets represent a new class of financial instruments, but he commented that they should not be considered commodities or currencies. In contrast, The U.S. Securities and Exchange Commission (SEC) will develop a guide about cryptocurrencies and will consider them as values.
To explain its point of view, Allaire argued that current laws cannot guide the particularities of cryptocurrencies because they were enacted with the characteristics of fiat money in mind.
The official said: “We urge legislators to recognize the economic power that innovation has unleashed and to act so that cryptocurrency and blockchain technologies flourish. We know that legislators want to support economic growth and we want them to take the opportunity to lead the charge”.
In an opposite position is the Law of Token Taxonomy, which seeks to prevent digital currencies from being defined as values. This law will create a minimis tax exemption for crypto-transactions of less than USD 600, according to Coin Center’s CEO, Jerry Brito.
Brito added that, according to current laws, users are technically “obligated” to report capital gains when they use cryptocurrencies to buy simple objects such as a laptop, airline tickets or even when they are going to write a smart contract.
A few days ago, the Internal Revenue Service (IRS) of The US gave priority to issue fiscal guidance for cryptocurrencies. The instruction will specifically cover topics such as acceptable methods for the calculation of cost base, cost basis assignment, and the fiscal treatment of bifurcations.
Malta is one of the example states in crypto adoption. The country has developed a comprehensive framework to regulate the crypto world, and it is being preparing to regulate artificial intelligence (AI).
Other European countries, such as France, are working to follow the path of Malta through the European Securities and Markets Authority (ESMA). This effort involves more and more countries, interested in converting cryptocurrencies into legal, safe and reliable payment methods.
By María Rodríguez
