Will crypto regulation serve to reduce illegal activities or will it just be a way to tax digital assets?

Will crypto regulation serve to reduce illegal activities or will it just be a way to tax digital assets?

Crypto’s trustless feature has also become a hotspot for illegal activities. This is why the government aims to regulate and eliminate these events; Is it really a way to reduce illicit activities? Or is it just a way to tax digital assets?

Due to the rising popularity of cryptocurrency, governments are starting to impose various regulations. For example, president Joe Biden recently signed an executive order calling the government to identify cryptocurrencies’ risks and benefits. The core purpose of the order is to protect users.

South Korea’s new president Yoon Seok Yeol promised to form some kind of regulation to reduce crypto-related crimes and bring back funds to the victims.

There have been numerous scam incidents related to cryptocurrency, and it is great to know that more governments are stepping in to regulate digital assets. It bears asking, however: is crypto regulation a great way to reduce illegal activities? How can these crypto-related laws help investors?

The problems to solve in the crypto space

Despite the fantastic features, cryptocurrency faces multiple problems that make the ecosystem challenging to invest in. To better understand, we researched to identify these issues and why crypto regulation is essential.

Protection of the consumers

Investments in traditional space or savings in a bank often include insurance that will secure consumers’ funds once things go south. In the crypto space, price volatility is inevitable, and scams and other wrongful doings are always present. In addition, market manipulation is present in the blockchain space, which lures people to invest in a platform.

The SQUID crypto scam is one of the best samples of market manipulation. First, the price of the cryptocurrency went soaring, then dropped to zero. As a result, users lost their funds while developers swam away in a pool of money after taking away hundreds of thousands of dollars.

Having the government meddle in the business provides security to consumers and ensures the legitimacy of the platform.

The cryptocurrency’s credibility

There are thousands of cryptocurrencies circulating worldwide. However, most newbies only select the more popular ones, such as Bitcoin, Ether, and Ripple. The general public does not pay too much attention to these new coins as the information is still lacking. With that, if developers were able to register their business to their local government, users would be able to identify the platform’s authenticity.

This will lead again to the protection of the users. A regulatory authority clearing cryptocurrency is required, which can provide all information about the performance of digital assets and their risks and potential.

Risks that may lie therein

The internet is a scary place, considering how fast and unstoppable it grows. Being an open space, the internet can be home to many fraudsters and hackers that can take all your funds instantly.

Information infrastructure and cryptocurrency-savvy financial advisers are necessities in today’s world of fast technological development. Investors will be able to decipher and be aware of the technological hazards associated with cryptocurrencies.

Scams and frauds

We talked about the protection, risks, and dangers of advanced technology. But, what are we protecting users from? Scams and frauds. The government will ensure that only trustworthy platforms have the right to operate the business, making the ecosystem less dangerous.

Additionally, a single cyber-attack might result in losses for cryptocurrency investors. Regulators have the power to put in place safeguards for cryptocurrency investors’ funds. Investors can also resolve problems or retrieve their assets in the event that they are wiped out.

Anti-money laundering

The money you can make on cryptocurrency is unimaginable. As a law-abiding citizen, one should inform the authority where their money came from. This is to impose a proper tax and avoid being tagged as a money launderer.

In addition, a person who makes a large amount of money in a very short time is suspicious. Government regulations could potentially eliminate this type of situation.

The necessity of crypto-related business taxation

While solving these problems through government involvement is a good move, bear in mind that this act can lead to possible taxation. Registering a business often requires payment, so do auditing and other processes to prove a business’ authenticity.

Singapore recently announced its provisions to tax NFT-generated income. NFT transactions and trading in them would be taxed, according to Singapore’s Finance Minister Lawrence Wong last week. NFT transactions will not be subject to Singapore’s capital gains taxes, according to Wong’s clarification of the situation.

The announcement coincides with recent tax measures that many observers believe would aid in reducing inequality, the reinforcement of the social compact, and the assistance of long-term expenditure.

Since January this year, the country’s government has set its eyes on crypto-related services. Since then, the government mentioned that they are examining the possible risks of digital investments.

The country’s officials have mentioned that they are open to these types of investments as these are vital for a “digitalized future” and have no plans of banning them.

Moreover, with the rising popularity of cryptocurrency, the government has the right to intervene to ensure the safety and legality of the business operating in the country, even though it might lead to possible taxation.

Conclusion

As a platform that aspires to bridge the gap between digital currencies and traditional finance, we at PrivacySwap are encouraged by the government’s gradual regulation of the cryptocurrency ecosystem. Despite knowing its consequences, we are certain that it will return to a more secure ecosystem in which to invest.

PrivacySwap is an advocate for privacy, and we recognize the importance of security in the modern world. As we transition to a much more utility-centric ecosystem, we are grateful to have a government that will assist our consumers and us in transacting freely, safely, and securely inside the technological environment.

Our approach to the PrivacyCard and DEX is ensuring that our service is secure both on the blockchain and in the real world. So come and join us in our efforts to make DeFi a better space.

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