Cryptocurrency is a form of digital or virtual currency. It uses encryption (cryptography) to ensure transaction security. According to fintech expert Sergei Kondratenko, one of the fundamental characteristics of cryptocurrency is that there is no central authority responsible for its issuance and regulation. Transactions are recorded and new units are issued through a decentralized system. In the context of the growing popularity of cryptocurrencies, many states are actively working to develop and implement regulatory measures for handling digital assets.
Sergei Kondratenko is a recognized specialist in a wide range of e-commerce services with experience for many years. Now, Sergei is the owner and leader of a group of companies engaged not only in different segments of e-commerce, but also successfully operating in different jurisdictions, represented on all continents of the world. The main goal is to drive new traffic, create and deliver an online experience that will endear users to the brand, and turn visitors into customers while maximizing overall profitability of the online business.
Sergei Kondratenko: international standards and regulation of cryptocurrencies
Over the past ten years, the number of cryptocurrencies on the global market has grown more than 130 times. By February 2023, their number reached 8,685 species. According to Sergei Kondratenko, during that period of rapid growth, the crypto market was characterized by high price volatility and sensitivity to cycles. The cryptocurrency market capitalization at the end of 2021 amounted to $2.9 trillion, and over the next year and a half, it increased almost 12 times. However, in June 2023 it decreased threefold – to $1 trillion.
The expert reports that in 2021 the global volume of transactions with major cryptocurrencies has reached a record $16 trillion, which is comparable to China’s GDP. A year later, this volume had approximately halved. Sergei Kondratenko emphasizes that such fluctuations indicate the dynamism and variability of the cryptocurrency market over a short period. The solution to this problem has become one of the most discussed issues among regulators.
World countries are taking different approaches to regulating crypto assets. Sergei Kondratenko gives an example of states that have already taken steps in this direction:
– For example, Switzerland and Japan have already passed new laws that cover crypto assets and their service providers. While in other regions, such as the European Union and the United States, the process of preparing relevant regulations is constantly developing new and more effective strategies.
It should be noted that in some countries there is a complete ban on the issue, storage and use of crypto-assets for residents, as well as on transactions. China has strict restrictions on the use of cryptocurrencies. Both trading and ICO (initial coin offering) are prohibited here. India has even stricter regulatory policies. It is intended to achieve a complete ban on the use of cryptocurrencies.
Sergei Kondratenko reports that the international community of regulators is actively involved in shaping the regulatory environment for cryptocurrencies. The main priority is to ensure the integrity of financial transactions by minimizing the use of crypto assets in illegal transactions. The Financial Action Task Force (FATF) has moved quickly to facilitate the creation of a global network to provide services related to crypto assets. The International Organization of Securities Commissions (IOSCO) has also developed guidelines within which cryptocurrency exchanges can operate.
US legislation regarding cryptocurrencies as an example for other states – Sergei Kondratenko
Many countries have already made significant efforts to introduce regulatory measures in the field of the cryptocurrency market. Sergei Kondratenko gives the example of the United States, where cryptocurrency is becoming an increasingly common asset. It is owned by 16% of the US adult population, and its holders worldwide number in the millions.
Given the rapid development of the cryptocurrency market and the risks and opportunities associated with it, US authorities recognize the urgent need for legislative regulation. As Sergei Kondratenko says, the first concept was presented on the White House website. Following it, US legislation on cryptocurrencies is developed taking into account priorities in the field of protecting the rights of all participants, financial stability, combating illegal transactions and accessibility of financial services. America also intends to maintain global leadership in the handling of crypto-assets and initiate innovation in the development of this area on the international stage.
This concept in the United States, according to Sergei Kondratenko, determines the structure of government agencies that will oversee the cryptocurrency market. It also establishes the basic functions of these organs. For example, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are responsible for fairly punishing violators of cryptocurrency laws.
The Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) are handling complaints from crypto investors. The Financial Literacy and Education Commission (FLEC) is responsible for educating the public about the risks of the cryptocurrency market and widespread fraudulent practices. The National Science Foundation (NSF) is engaged in developments in the field of digital assets and financial solutions. Makes them more convenient, accessible and inclusive.
The EU is also actively working to establish a regulatory framework for digital currencies. In 2020, a package of laws “MiCA” (Markets in Crypto-assets).
– The MiCA package of laws creates uniform norms and principles and ensures standardization in the regulation of cryptocurrencies in EU countries. It aims to protect investor rights, prevent financial fraud, and create a safe environment for digital assets within the EU. These measures demonstrate the EU’s desire to actively participate in shaping the regulation of the cryptocurrency market. At the same time, the interests and safety of its participants are taken into account,” comments Sergei Kondratenko.
The expert believes that the adoption of common standards and rules in the field of cryptocurrencies can remove some barriers to the development of the industry. Common rules will provide predictability and stability, which can stimulate investment growth and attract new participants to the global digital asset market. Additionally, a consistent regulatory approach could reduce risks for companies operating in the cryptocurrency space and create more opportunities for new developments.