Cryptocurrency regulation needs to add value to succeed
Bitcoin boss says regulators need to support, not impede, traders if they want regulatory success.
Cryptocurrency regulation is starting to take hold all over the world. And with AUSTRAC recently setting rules for local cryptocurrency exchanges, the landscape has changed for local traders. Rupert Hackett is the CEO of bitcoin.com.au, an Australian exchange that operates with newsagents to facilitate bitcoin transactions.
Along with other operators, Hackett says he's been working with other exchange operators and AUSTRAC for a couple of years to explain how cryptocurrency trading works and to come up with a code of conduct as well as working with the Australian Tax Office (ATO) and Australian Investments and Security Commission (ASIC) to ensure government agencies are well informed when it comes to creating policy. But challenges remain.
"AUSTRAC only has the power to regulate companies based in Australia. Because this tech is global, it really creates a requirement for an international coalition to tackle regulation," said Hackett.
That's what has been behind the creation of the IDACB, the International Decentralised Association of Cryptocurrency and Blockchain. This is a group of about 50 countries that forms a communication channel between different countries to discuss good and bad regulation. Hackett said there's an aim to increase membership to about 100 countries by the year's end.
"There's a big potential to set this up as the new Macau or Cayman Islands or some haven for some kind of business - a new 'Crypto Valley' so to speak," he said.
One of the challenges regulators need to face, said Hackett, is that cryptocurrency trades can be executed on peer-to-peer networks, outside exchanges. That means there will be transactions that fall outside the regulations set by AUSTRAC and other international regulators.
"On that basis, any sort of regulation needs to provide value to the end-user," said Hackett. "Or you're placing a gate on a path that anyone can walk around".
He likens this to the way Uber bypassed taxi regulation by establishing a peer-to-peer system, forcing regulation to catch up without penalising users.