By Nicholas Perugini, Trending Writer
The concept of cryptocurrencies have the potential to change the way the world looks at finance. Over the past few years, cryptocurrencies have taken the world by storm with popular examples like Bitcoin being worth thousands of dollars. This has caused a frenzy among amateur and professional investors around the world who see cryptocurrencies as the next big investment. This has caused an increase in volatility for the cryptocurrency market. Earlier this month Bitcoin was valued at over $11,000 and as of March 15th Bitcoin is worth a little over $8,000. By the time of the publishing of this article, that value may change again. This volatility has governments and international finance groups worried.
Last week, Managing Director of the International Monetary Fund, Christine Lagarde has called for crack down on using Bitcoin for illegal means. Lagarde has suggested that Bitcoin’s Blockchain, which is an essentially a massive encrypted ledger of every Bitcoin transaction, can be used as the corner stone for future international regulation. Blockchain technology could be used to help fight fraud and illegal transactions if properly regulated. If the IMF were able to lead the charge in regulating cryptocurrencies then future universal global regulation would soon follow. According to The Guardian, the IMF plans on presenting a report on cryptocurrencies next week to the G20. A combined effort of the IMF and the G20 may lead to a more regulated future for cryptocurrencies. Until that happens, nations are left to explore their own ways to regulate them.
Last week South Korean law enforcement had raided 3 crypto currency exchanges and charged the operators of the exchanges for embezzlement, per Coindesk. This crack down means that governments are becoming aware of the financial crimes that are being committed with the help of cryptocurrencies. With some cryptocurrencies being worth thousands of dollars, amateur investors are at risk of seeing significant losses if they are scammed or if the cryptocurrency market bursts.
John Oliver in his weekly show, Last Week Tonight, had a segment were he talked about the potential risk with investing in cryptocurrencies. In the segment he talked about how technology behind these digital currencies is so new that regulators are lagging behind. At times basic regulatory actions used in traditional markets have not yet been applied. This can be dangerous for unsuspecting investors who may be getting scammed but not yet realize it.
The world’s largest economies are working regulating on cryptocurrencies. Perhaps after the G20 summit this year there may be a cohesive plan from national governments to regulate this new technology. Until then, each nation is on its own to forge their own regulation.
A version of this article appeared in the Tuesday, March 20th print edition.
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