Since cryptocurrency has started to generate more and more headlines, governments have been forced to take a stance. Some countries have imposed severe restrictions on cryptocurrency trade and mining, whilst others have not created any regulations at all. Now the German Federal Government has stated that they do not consider cryptocurrency to be problematic in terms of financial stability.
However, they did also make it clear that a certain amount of regulation would be necessary in order to maintain said stability further down the line. The reasoning behind this is that the cryptocurrency market currently is too small to pose a real threat to the existing economy. This could very well change in the future, however, which is why the German government wants to monitor the market together with the other G20 countries.
AfD raises concerns in the German parliament
The political party Alternative for Germany (AfD) recently raised some concerns about cryptocurrency in the German parliament. These concerns included illegal activities, such as money laundering, gambling, drug trade, and terror financing. The German government responded to these concerns by planning for a national risk analysis to be carried out by the end of next year. The government issued the following statement:
In order to address the risks of Bitcoin and other “cryptocurrencies”, there are already important regulations in Germany: for example, German-based crypto traders must follow the same anti-money laundering regulations as other financial service providers – especially when it comes to identifying customers.
Commercial cryptocurrency trading still falls under trade regulations
In the meantime, the government reminded citizens that in any commercial trade needed to be cleared with the Federal Financial Supervisory Authority (BaFin). Trading in cryptocurrency is no exception to this rule, which is why traders would be wise to consult the BaFin prior to engaging in trade. On another note, the German government also mentioned the need for an international cooperation to regulate the world of cryptocurrency. They stated:
Rather, there is a need for coordinated action at European and international level. The Federal Government is, therefore, pressing for a harmonized handling of crypto-tokens at this both levels.
The IMF finds no reason to worry – yet
At present, however, cryptocurrency enthusiasts can breathe out and rest easy. Like the German government, the International Monetary Fund (IMF) has stated that it does not view cryptocurrency as a threat to the stability of the global economy as a whole. Both the German government and the IMF have most likely come to the right conclusion.
However, it would be worth noting that the cryptocurrency community is growing at a rapid pace and that the change from an economy based on cryptocurrency rather than fiat money might come sooner than expected. Given that Wall Street firms and big tech companies alike are all investing in cryptocurrency, as well as researching and developing blockchain projects, the future is closer than ever before.
What do you think? Will we all be using cryptocurrency in the near future? Should governments step in to regulate the market now or later? Leave your comments in the section below!