Perhaps the biggest boost for cryptocurrencies came from Finland’s central bank economists, who called the infrastructure behind cryptocurrencies such as Bitcoin “revolutionary” and praised its ability to prevent manipulation.
The combined market value of all cryptocurrencies in circulation reached $170 billion by the end of August 2017. That’s 850 % higher than at the beginning of the year, according to CoinMarketCap, a leading cryptocoin prices and market capitalisation tracker website. It is no surprise that this kind of growth sparked much hand-wringing among regulators and central banks, who are still undecided as to whether cryptocurrencies should be classified as a commodity, an asset or a form of currency.
ARE CRYPTOCURRENCIES MONEY?
That might seem like an odd discussion to be having. But one of the basic functions of currency is to facilitate transactions in a timely manner. And to protect the security of the blockchain (the technology behind cryptocurrencies such as Bitcoin), the processing of Bitcoin transactions is sometimes very slow.
Due to restrictions on the limit of Bitcoin transactions which can be completed in a day, it may take a few days to complete a single transaction, rendering the cryptocurrency unable to fulfil the basic function of money at times. Private blockchains can speed up transactions, but they are not popular and availability is limited.
The call to better regulate cryptocurrency gained momentum after the International Monetary Fund (IMF) issued a staff discussion note stating that banks should consider investing in cryptocurrencies: “Rapid advances in digital technology are transforming the financial services landscape, creating opportunities and challenges for consumers, service providers and regulators alike.”
Any wholesale adoption by the banking sector would clearly establish a huge market for cryptocurrencies, but the traffic isn’t moving entirely one way. Chinese regulators dealt a huge blow to the crypto market at the beginning of September when the People’s Bank of China made it illegal to raise funds through Initial Coin Offerings (ICOs). An ICO is a fundraising tool that trades future cryptocoins in exchange for cryptocurrencies of immediate, liquid value.They have become an easy platform for digital currency geeks to raise funds quickly. In simpler terms, ICOs are a crowdfunding platform for future cryptocoins. They have already raised $2.32 billion, according to industry website Cryptocompare.
WORLDWIDE REACTIONS TO CRYPTOCURRENCIES
China is getting stricter in general. It was even reported that it may ban the trading of virtual currencies on domestic exchanges entirely. If this goes ahead, it will cer tainly dampen the enthusiasm around the sector. But there always seems to be some better news around the corner, and more oversight may well generate the confidence that can overcome concerns.
The Russian finance ministry is pushing to regulate the use of cryptocurrencies in the country by the end of 2017, while the country’s central bank has been working on regulation for digital currencies since the beginning of the year. Perhaps the biggest boost for cryptocurrencies came from Finland’s central bank economists, who called the infrastructure behind cryptocurrencies such as Bitcoin “revolutionary” and praised its ability to prevent manipulation.
There has also been recognition for cryptocurrencies in countries such as Australia and Japan, which are both implementing policies to legalise cryptocurrencies exchanges. Japan has made it mandatory for Bitcoin exchanges to register with regulators and undergo annual auditing by certified accountants.
Singapore’s central bank noted that the function of digital tokens went beyond simply being a virtual currency, while asserting some oversight. It said that ICOs would have to be approved or recognised by the bank or recognised under Singapore’s Securities and Futures Act.
In the US, the Securities and Exchange Commission echoed