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Home » news » The place of cryptocurrency and blockchain technology in the US and the EU

The place of cryptocurrency and blockchain technology in the US and the EU

Bitcoin and bloсkchain technology

Cryptocurrency - Blockchain

With the growing admission of Bitcoin and bloсkchain technology the interest of public authorities in their control and regulation increases too. But as legislators and regulators know enough vaguely about what actually are these concepts, governments are not able competently to approach to the examination of the mechanism for further monitoring. Therefore, regulators are turning to various, at first glance, not always right methods.

Why is the US government going to withdraw from the shadows cryptocurrencies?

The US Internal Revenue Service has filed a petition for delivery data upon millions of utilizers of cryptocurrency exchange and wallet operator Coinbase, thereby to drive them in utter confusion. Per to experts, the US government's request for the access to personal data of millions Coinbase utilizers signals the beginning of the mainstream for Bitcoin.

"John Doe" asked to provide details of all Coinbase users for 2013, 2014 and 2015, pursuant to the request filed on 17 November by the Internal Revenue Service (IRS) in the federal court of California.

In the request, IRS refers to the fact that the internal laws of the United States could not be met by all utilizers of Coinbase during this period. Coinbase noted it would challenge the request in a court.

Cryptocurrencies - digital assets, providing to utilizer a certain degree of anonymity. But such user's privacy causes a headache for the government, about the possible applying cryptocurrencies for drug trafficking, money laundering or tax evasion. Presently, digital currency is not subject to tax as assets, and thus it has gained recognition

Some cryptocurrency experts believe that IRS simply does not take sufficient measures to regulate and research cryptocurrencies.

Many experts, though alarmed too expansionist nature of the request, saying that the government's close attention to cryptocurrencies is, in any case, inevitable, because they have become mainstream.

It indicates a growing acceptance of Bitcoin", - told an analyst specializing in Bitcoins at ARK Investment Management Chris Burniske.

"As more and more people utilize it, it will grow and influence on the national and global economy, so the tax office needs more understanding of how citizens apply it.

All we can see how governments are struggling to regulate and tax cryptocurrencies ".

This is not the first time when the US tax service utilizes such requests for personal info in an investigation, although it is possible that the request to Coinbase will be the largest of its kind.

Europe may ban blockchain

The European Securities and Markets Authority (ESMA), that ensuring protection of the rights of investor, regulation of markets and financial stability, looking for ways to control distributed registries technology.

On the dedicated to blockchain conference held on the last week in London, Patrick Armstrong, senior risk analyst, detailed the approach of ESMA to blockchain technology. One of the strategies he has been allocated - a total ban of any products or processes with using of blockchain.

"As for regulators and market participants, blockchain technology, and its regulation remains the important issue", - told Armstrong. "When we are faced with financial innovation, the controller can apply one of three approaches".

The first approach, which Armstrong described as "restrictive", is prohibition or restriction of products and processes grounded on blockchain. The approach will come into force on 1 January 2018, and if the risks step over the threshold earlier that the expected by the regulator, it is possible preventive measures in the form of issuing warnings.

However, Armstrong noted that it was possible to eliminate the first restraining method, referring to the fact that the government did not see the risk in blockchain technology to achieve its three objectives: stability, security, and continuity.

A more reasonable is wait and see approach, which, per to Armstrong, ESMA already is actively using. He called the second approach as "cautious", noting:

"Innovation does not reach the threshold that requires the active participation of the regulatory authorities".

The third approach, which Armstrong described as "challenging, or leading to changes" is also out of action for some time. Applying this method, ESMA will "actively promote products or processes of regulation" in the presence of the potential economic and social gains. Armstrong noted that was not yet the time had come to utilize this approach.

Armstrong inferred that regulators should "find the right balance between regulation and technology, regardless of their chosen approach".

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