Crypto-fans and libertarians are celebrating the recent announcement by the Monetary Authority of Singapore (MAS) that they do not intend to regulate cryptocurrencies as a victory. Before they break out the bubbly, it is important to realize the full extent of the noose that Singapore and other governments are quietly tying whilst they search for a very tall tree.
Since cryptocurrencies are decentralized, they remain out of the span of control of most traditional organs of government. That’s one of the primary motivators for Singapore (and most other developed nations) to try and meld some aspects of the tightly regulated commercial financial sector onto the feral realm of crypto finance. But the pervasive nature of Bitcoin and other cryptocurrency has polarized the commercial financial community. On one hand JPMorgan Chase CEO Jamie Dimon has famously scorned the entire sector as fraudulent while on the other Fidelity CEO Abigail Johnson has spoken positively of the role of crypto in the future of finance and has gone so far as to authorizing the mining Bitcoin and Ethereum within the investment giant.
The rate of adoption among an exceptionally wide range of investors has far surpassed the point at which politicians and central bankers can safely scoff at the prospect of having to deal with crypto in the mainstream. If they can’t abolish it, they need to find a way to exert some level of state control on the use of crypto. By establishing regulation protocols at the choke points, those places where crypto is exchanged for fiat and places represent a logical point of entry for regulation, surveillance, and taxation. To be clear, Singapore isn't trying to do away with cryptocurrency. They are just demanding full regulatory compliance for all exchanges, money transfer, lending, and payment systems that utilize cryptocurrency.
Singapore is among the most highly regulated societies on earth. They also have one of the soundest financial infrastructures. Often referred to as the Switzerland of Asia, they have managed to navigate around various regional and global financial crises with aplomb. They are taking the steps deemed necessary by a central bank and commercial finance sector in order to ensure that the state gets their share of fees and revenues generated by cryptocurrency transactions. They will definitely serve as a model for other nations seeking to gain control of the untamed world of cryptocurrency.
From the perspective of the investor, the increasing swell of authoritarian tide creates opportunity in the realm of well-architected privacy-based currencies, infrastructural advances, and secure delivery technologies. Technologies that optimize true peer-to-peer exchange and full-spectrum privacy will be at the forefront of growth starting in the first quarter of 2018. Upcoming research will provide analysis of specific coins and technologies that will address these soon-to-be pressing user needs.
