While United States is struggling to give a clear legislation to crypto companies and pushing them away from the boundaries with hefty fines, Hong Kong legislators plans to make crypto available to all its citizens starting June 1st. This will be remarkable step to the blockchain and crypto industry which will help foster financial innovation. This potentially will help money flowing to the crypto space in Asia.
Regulators from Technology rich countries such as India ( Reserve Bank of India) have banned crypto investments making it almost impossible for its citizen’s to invest nor start a crypto based startups at the moment. This has seen an influx of entrepreneurs moving to Singapore, Dubai and other countries who foster innovation.
Similar to India, SEC has been targeting crypto companies with hefty fines with no clear regulation which may push crypto and blockchain companies out of the country. It’s understandable that blockchain technology is new and governments take time to warm up to the technology space. United States has been forefront of innovation for decades and the delay for crypto has already started taking a toll on innovation. Recent scams and bankruptcies such as FTX, Alamada, Celsius, BlockFi and many more has created a series of negative impact which is seen across the entire ecosystem. But these incidents should not penalize legitimate companies who want to innovate in this ecosystem.
Coinbase which went publish on April 1st 2021 have been struggling to grow without clear regulations which is echoed by its CEO Brian Armstrong. In response to a tweet on Hong Kong news, he expresses his frustration as seen in his tweet below.
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Conclusion on Crypto and Banking
At the end of day, every country wants to harbour innovation and adopt newer technology. Regulators must work to understand the pain points and help to make it happen instead of penalizing without clear regulations. Fraud is bad and should be penalized but when laws doesn’t exist or not clear, penalizing companies will drive the innovation out.
Banking and cryptocurrency deals with money but trying to force banking regulations to crypto space doesn’t work in practice because of differences. If you see the history, in-spite of heavy regulations in the banking industry, major US banks have paid in billions in fines over the years and banks are big enough to take that hit.
Crypto industry is small and new. Hence penalizing with similar heavy fines like banks are not bearable and entrepreneurs will look elsewhere for their startups. Innovation cannot be stopped nor is decentralization hence countries must make a decision if they want to participate with sensible laws to help innovation at scale or loose the cutting edge tech which can help progress.
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*Disclaimer: All views expressed in this article is for educational purposes only and should not be constituted as financial advice. The opinions are expressed by the author and doesn’t necessarily reflect of CNB
