The primary objective behind cryptocurrency and blockchain technology is to handover the control to the common man. The anonymity feature of decentralized technologies is a powerful tool for liberating the financial domain from the clutches of large banks, financial institutions, and regulatory compliances. However, with governments across the globe, making the rules and regulations to take control of these new emerging technologies, the whole purpose of their invention has come under threat.
It is important to note that the legislation related to cryptocurrency and blockchain is different in different parts of the world. While some of the countries are quite open to the idea of decentralized technology, others have made strict regulations to check illegal activities that might take place through the digital coins. The USA is one of the leading countries that has formulated rules and regulations to control cryptocurrency exchanges, decentralized finance, cryptocurrency, and other important stakeholders involved in the decentralized sphere.
Although the intention behind these tightening regulations is noble, i.e., to protect the owners from illegal fraud, scams, etc., these might adversely impact the industry’s fledgling nature. According to many experts, the strict KYC rules on self-hosted wallets can negative impact smart contracts and decentralized finance. According to the new legislation proposed by the US authorities, it will be mandatory for the US-based cryptocurrency exchanges to have a complete record of these self-hosted wallets. If these proposed regulations come into effect, this will be detrimental to the growth of the industry.
According to the Co-Founder and Chief Executive Officer of Coinbase, Brian Armstrong, there would be issues with the identifiability of the smart contracts as it is not necessarily owned by an individual human being. In such a case, applying new rules and regulations would jeopardize the growth potential of the industry. Along the same lines, there are concerns related to the anonymous nature of the transactions, which might cause the industry to degrow in the future.
If the government authorities in the USA continues to tighten the regulation on the cryptocurrency and blockchain domain, this might result in the shifting of the industry in the countries where the regulations are more friendly and open in nature. Hence, it is essential to take a balanced approach while implementing regulations related to the crypto industry so that concerns of both industry and customers can be addressed desirably.