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Calls for cryptocurrency regulation were a resounding theme at the World Economic Forum in Davos last week.The world’s most prominent financial institutions remain wary of going all in on cryptocurrencies, amid fears of future regulation leading the market to tank.
Governments around the world have signaled their ongoing or imminent intent to legislate and regulate cryptocurrencies around the world, and it seems the largest banking and financial firms are waiting for more clarity before they forge ahead with plans to enter the market.
Countries like Russia are forging ahead with the creation of their own, government-issued cryptocurrency, which they can fully control. Others, like Venezuela, have been forced to do so to battle out-of-control inflation that has crippled its economy. Opposed to a decentralized and anonymous system, the creation of a cryptocurrency that governments can control is their only option to wrestle back some semblance of ‘control’ that has been handed to the everyday man using cryptocurrencies.
Speaking to RT at the WEF in Davos, Universa CEO Alexander Borodich said governments are keen to issue their own virtual currencies that would be backed by commodities like oil.
“From my perspective, they will offer state country-wide cryptocurrencies like Cryptorruble or crypto-barrel if they like to… back the oil they have or other natural resources.”
He added that 2018 would see the emergence of these state-issued cryptocurrencies to challenge the dominance of Bitcoin and other popular virtual currencies.
Nefarious uses still a concern
Despite the best intentions of honest developers, exchanges and Blockchain engineers, there is a prevailing sentiment that the underworld still uses cryptocurrencies. It’s been a number of years since the closure of Silk Road and subsequent black markets, but heads of states are still citing concerns over the nefarious uses of virtual currencies.
As quoted by the Independent, US treasury secretary Steve Mnuchin said there is a concerted effort being made to prevent cryptocurrencies being used for illicit trade.
"My number-one focus on cryptocurrencies, whether that be digital currencies or Bitcoin or other things, is that we want to make sure that they're not used for illicit activities.”
A major concern is also the well-being of financial markets and systems that have been shaken up by the massive adoption of Bitcoin and altcoins in the past 12 months. In the words of Mnuchin:
"We encourage fintech and we encourage innovation, but we want to make sure all of our financial markets are safe. We want to make sure that the rest of the world -- and many of the (Group of) 20 countries are already starting on this -- have the same regulations.”
IMF head Christine Lagarde also painted a harsh perception of cryptocurrencies.
"The anonymity and lack of transparency and the way in which it conceals and protects money laundering and financing of terrorism is just unacceptable. It needs to be taken into account but then there will be innovations coming out of these movements.”
Nevertheless, the cryptocurrency community has been bullish on social media, slamming the apathy swirling around at Davos this week.