Vladimir Serzhanovich, co-founder, CopPay argues that instead of banning or restricting the use of cryptocurrencies, governments need to find new ways to make them more liquid, like ‘real’ world assets: with the help of international finance professionals.
From the outside looking in, it seems that finance experts have a dim view of cryptocurrencies. Many analysts speculate that the cryptocurrency market is a bubble that will burst sooner or later (including Jamie Dimon, CEO of JPMorgan Chase), while others believe that catastrophe will take place when the total capitalization of all cryptocurrencies reaches $500 billion(today it is about $150 billion).
Why all of the negative speculation? Because cryptocurrencies are not connected with the ‘real’ economy. How can they be when there’s widespread reluctance to take them as seriously as FIAT currencies?
As Alberto Perucchini, Next Generation research analyst at Julius Baer, pointed out in an interview with RIA Novosti, only three of the 500 largest online retailers accept bitcoins or any other cryptocurrencies.
But things are changing quickly. Cryptocurrencies won’t come crashing down like the experts think they will, not if they gain enough liquidity. And they will. Sooner than many think.
Save To Spend
Up until now cryptocurrencies have remained instruments of investment. Very attractive instruments with enormous growth potential. While those who invested early will no doubt tell us it’s easy to earn money; few will deny that cryptocurrencies to make purchases presents an entirely different set of challenges.
Administrative barriers and high volatility are the key factors preventing the cryptomarket from establishing links with the real economy. Governments haven’t exactly been forthcoming about regulating them, in some circumstances have taken prohibitive measures – as China has.
However, there are a number of blockchain projects working hard to change of the tide of opinion, making real world market adoption a lot easier: such as my own company, CopPay, which makes Bitcoin, Ethereum, and other cryptocurrencies available for everyone to use.
State Of Play
Technology can only have a positive effect on the market stabilization; preventing any assumed collapse and potentially attracting millions of new players to the market. Surely that’s motivation enough for governments to begin working actively on legal frameworks for cryptocurrency transactions?
Only time will tell, but early-adopting countries will undoubtedly spur their economies forwards by taking cryptocurrencies seriously. Those that are – like Japan and Switzerland – are already looking at their integration in the real economy. Other countries are following suit though; particularly Commonwealth nations such as Australia, Hong Kong, Singapore, and Canada, which don’t limit the commercial activity in the cryptocurrency market and demonstrate good regulatory dynamics. And of course the US is getting in on the action too.
In America cryptocurrencies are regarded as a property, and profits must be registered and are subject to capital gains taxes. profit from cryptocurrency must register each transaction and are liable to pay tax on them. Also, in July 2017, a draft law on cryptocurrencies was prepared; designed to reduce the legal risks for cryptocurrency vendors, requiring them to obtain licenses to protect their clients.
Europe is opening up, and while some national regulators within the EU may have reservations, the unified licensing system in place makes the transactional environment a comfortable one, on the whole.
African nations too are keen to incentivize the development of cryptocurrency payment projects. However, broad adoption will take some time; given limited access to banking services particularly in sub-Saharan Africa.
Permit: Don’t Prohibit
Overall, despite some detractors – like China and most of South America – it’s clear that the real world is waking up to the opportunities that cryptocurrencies offer, and they’re gradually obtaining an official status. While a lot of countries’ regulators are content to ‘wait and see’ what happens elsewhere, those enforcing bans aren’t anti-cryptocurrency per se; just more concerned with perpetuating state market controls. But, as cryptocurrency becomes more commonplace and liquid, and best practice regulations become more widely adopted, there can be little doubt that they’ll soon be no less ‘real’ than the other millions of online transactions and exchanges that happen every single day.
Vladimir Serzhanovich is co-founder, chairman of the Board of directors of CopPay. He is successfully engaged in business for 19 years. He created projects in retail and service sectors from scratch. Venture investor. The founder of the blockchain laboratory Consensus Lab, the blockchain school, the blockchain hackathon, etc. In CopPay project is actively engaged in attracting investment, building a team and business processes.