At Bloomberg Ideas, an event that features leading experts in various industries, George Mason University economics professor Tyler Cowen stated that if crypto remains illegal, adoption will be difficult to achieve.
“If crypto stays illegal, it will be ghettoized, and that will make it harder for it to spread ultimately.”
However, in major markets including the US, Japan, South Korea, Singapore, Switzerland, and the UK, the usage and trading of cryptocurrencies are legal, with sufficient regulatory frameworks in place to protect investors in the global digital asset exchange market.
According to Cowen, regulation around cryptocurrencies as an emerging asset class has to be solidified further to attract more investors into the market and encourage merchants to adopt cryptocurrencies as an alternative payment method to fiat currencies.
For years, economists have mischaracterized cryptocurrencies as criminal money, an unregulated asset class, and an inefficient payment system, as seen in the recent outburst of widely recognized economist Nouriel Roubini.
The negative stance towards cryptocurrencies portrayed by the majority of leading economists has been expected by the cryptocurrency industry. As decentralized financial networks, consensus currencies challenge the fundamental belief of economists that fiat currencies serve as the base monetary system of the global economy.
But, it is of utmost importance, at least for companies that provide services in the finance sector, to consider the possibility of digital assets potentially competing against fiat currencies in the long-term due the declining trust towards middlemen and financial institutions by millennials.
As former Goldman sachs CEO and chairman Lloyd Blankfein emphasized, who previously stated that it is “arrogant” for economists and bankers to think crypto has no future, there exists a chance that cryptocurrencies could arise and evolve into a major asset class in the years to come.
“If you go through that fiat currency where they say this is worth what it’s worth because I, the government, says it is, why couldn’t you have a consensus currency?”
Hence, while the skepticism towards malpractices and poor protocols utilized by some cryptocurrencies in the global market is encouraged, intentionally mischaracterizing the asset class as an “illegal” payment method and currency is highly inappropriate and more importantly, inaccurate.
The Japanese government has recently allowed 21 cryptocurrency exchanges to form a consortium and self-regulate the local digital asset exchange market, with a national licensing program in place to oversee businesses in the industry.
The government of South Korea officially recognized the cryptocurrency market as a legitimate industry, acknowledging the blockchain as a core technology in the fourth industrial revolution. Gopax, a leading exchange in the local market, is financed and operated by Shinhan, the 2nd largest commercial bank in the nation.
Based on the regulatory frameworks established in major regions, it is evident that cryptocurrency remains legal as a payment method, a remittance system, and as a currency. Even China, which implemented a blanket ban on cryptocurrency trading in September 2017, has recently recognized Bitcoin as a property under local regulations, allowing individuals and businesses to hold and send or receive cryptocurrencies legally.