As the debate about regulation of the crypto sector rumbles on, there are many different factors at play that should be of interest to CFD traders who take positions on digital coin assets. With major financial institutions continuing to make forays into the sector and the technology that underlies it, and several Arab states already backing large scale blockchain projects, there is no doubt that wider acceptance is already underway.
However, it is likely that major economies, such as the US, China and the EU, may well lag behind other nations which are at a similar stage of newly advanced economic development, but even this idea is complicated as the recent opposing views taken by Russia and India illustrate.
Russian Minister of Justice Alexander Konovalov announced last week that there is no need to formalize legislation related to crypto, throwing his country’s stance on the issue something of a curveball. Konovalov said that digital assets cannot be used as a means of payment because his country’s constitution does not allow it, so therefore new laws are not needed, and cryptocurrencies do not need to be legally defined.
He also cited Article 75 of the Russian Constitution which covers currency and the Central Bank of the Russian Federation being allowed to be the sole issuer of Russian ruble, the only recognized currency.
Russian news agency Tass reported that Konovalov considered cryptocurrency “other property” in terms of legislation, but that it isn’t necessary to further define the concept of cryptocurrency. However, these latest pronouncements are at odds with the news from last month which saw a draft law from the Ministry of Economic Development being put forward to would allow the IT sector to make use of digital assets in financial transactions.
This isn’t the first time that Russia’s stance on cryptocurrencies has appeared to be confused and to be something of a gray area. Last year, the Russian parliament’s lower house postponed the second reading of a bill aimed at regulating the use of cryptocurrencies. The main cause of the delay is an ongoing dispute between Russia’s Central Bank and the Ministry of Economic Development as to how such regulation would actually work in practice.
Only last month, Prime Minister Dmitry Medvedev said that there was no need to “bury”
digital assets whilst speaking at a high-level economic conference. He commented that they have both “bright and dark sides”.
Indian Blockchain Summit
In India, a more definite approach is being taken, with a blockchain summit supported by the government drawing together many different policy makers with the aim of developing the country’s cryptocurrency regulation. A regulatory framework for cryptocurrency is expected to be drawn up based on input by officials from the Indian Ministry of Finance and the specialists making up the panel.
The outcomes of the summit could have strong implications for forex traders using crypto assets, as any legislation to come out of the recommendations and reports would essentially be the first time that a major world government has taken the plunge to tackle the issue of legislating the cryptocurrency sector in a clear and concise way.
The ‘Blockchain Summit India 2019’ has the backing of the state government of Uttar Pradesh and the Indian government’s Department of Science and Technology. Its website describes the summit as working towards enabling the Indian government and its ministries to speed up the process of developing blockchain and cryptocurrency ecosystems.
Janina Lowisz, the event’s fintech partner Cashaa’s Marketing VP, said that: “for the first time, the ministers from all relevant departments have come together with experts from the space as well as from leading universities and global brands to learn about and speed up the process of regulating cryptocurrency”.
Other government bodies taking part include the Ministry of Commerce and Industry, the Ministry of Human Resources Development, the Department of Information Technology and the Ministry of Law and Justice.
Currently being drafted by a committee headed by Subhash Chandra Garg, the Ministry of Finance Secretary of Economic Affairs, the regulatory framework report is reportedly in its final stage. Even so, the scope of the recommendations is rumored to range from a complete ban on cryptocurrencies through to strict legalization. The Ministry of Finance has explained that it “is pursuing the matter with due caution” and added, “It is difficult to state a specific timeline to come up with clear recommendations”.
As these two cases show, there is still a great deal of debate around regulating the crypto sector at the highest levels. Whatever the outcomes, and whether the Russian or Indian viewpoints eventually coalesce or divide even further, this will affect investors in digital coins. Whether that takes the form of actually buying assets or trading them on forex markets in the form of a contract for difference, regulation will doubtless affect the future of the markets in as yet unpredictable ways.