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Is it possible to find a balance?

30 October 2017 21:00, UTC
Margareth Nail
The time has come when not only miners and fans of the unusual, but also leaders of states pay attention to crypto economy. The greatest minds in various countries of the world are involved in the development of legislation aimed at curbing the new economic reality, which originated and develops without being controlled by authorities. Bitnewstoday.com tries to find out if it is possible to develop a law that would reassure the authorities and give them a chance to monitor the new sphere of economy, and at the same time, would not completely deprive crypto economy subjects of freedom.

Why it is vital to regulate crypto economy?

Blockchain technology appeared in the period when economic agents are not always guided by the principles of honesty and justice in mutual interaction. Without these principles, the very essence of crypto economy can be questioned. One of the reasons is that the absence of control and responsibility is a good precondition for scammers to quietly steal money. Therefore, the issue of regulating cryptoeconomy is acute in many countries of the world.

The adherents of the free functioning of crypto economу firmly believe that a new form of social order is emerging. It is supposed to completely exclude mediators and, most importantly, can exist without regulation. In their opinion, cryptocurrency should have self-regulation, similarly to Smith's "invisible hand".

As practice shows, the "invisible hand" can not always operate on its own, the same applies to crypto economy. Any careless actions by the authorities and their excessive desire to regulate and complicate everything, can ruin a new emerging type of economic relations.

"Regulation, on the one hand, is necessary to preserve the powers of the state in such an important area as money issue, and, on the other hand, it can not globally limit the key advantage of the cryptocurrency - extraterritoriality. "Overregulation" will simply lead to the market's escape into another, more friendly, jurisdiction, " said Konstantin Korishchenko, Head of the Department of Stock Markets and Financial Engineering of the Faculty of Finance and Banking of RANEPA.

Is it possible to find a balance of interests?

Alexei Noskov, director of customer relations, manager of the project "Mining" at data center Xelent, believes that the legislation should be a framework, in his opinion, it is necessary to designate the boundaries of the legal field for the development of cryptoeconomics. "First, it is important not to bury the emerging market and the new industry of the digital economy and to protect market participants. And only after - to protect the interests of the state, and not at the expense of the interests of market participants," the expert said.

Apart from the interests of crypto economy participants and states, the interests of big business should also be taken into account, since it has the lion's share of capital and, as a result, power.

"The further fate of cryptocurrency in the Russian financial system will depend solely on how ready large businesses and monopolies are to use them in their investment practices (for example, ICO mechanisms and crowdfunding through cryptocurrencies) and economic use (for payment of goods and services)," says Artem Yudkin from expert center "Modernization".

Nikita Kulikov, founder of "PravoRobotov" and head of the working groups on the legislative regulation of the digital economy at the Russian State Duma, proposes to consider the problem of regulation not only at the local but also at the global level. "It's possible to adopt some global declaration. It should contain the main characteristics and classification of cryptocurrency. If countries across the world join and ratify this declaration it would mean legalizing cryptocurrency on their territory in accordance with global principles and terms. I think that this would be the best solution to this issue, "the expert believes.

If you can't prevent a revolution - take over it!

Some experts believe that the authorities need to control the development of crypto assets and get all the advantages of the situation. Due to the fact that Russia-based projects play not the least role in the process of creating new cryptocurrencies, Russian authorities can benefit from this.

"The Russian authorities (ed.) may create a special cryptoeconomic zone, for example, in Sochi. Privileged and safe conditions for carrying out crypto projects can be legislatively established in such a zone. These zones can become as attractive as the Silicon Valley. People will come there to launch their ICO. By the way, in Sochi such a zone will fill up the residential infrastructure that is idle after the Olympics, " advises Stanislav Teo, CEO of the Nakamoto Capital cryptocurrency fund.

To shelter other people's capital

In addition, there are suggestions in cryptosphere that Russia can benefit from the restrictive policies of the Chinese, American and South Korean authorities. However, it is necessary to create legislation that provides favorable conditions for the activity of foreign cryptocurrency projects.

Experts believe that Russia has the opportunity to host a huge number of new ICOs from around the world, which will attract financing to absolutely different spheres of the economy, not only in digital, but also in the real sector.

Also, some experts urge officials focus not on developing radical measures to regulate the decentralized system, but on establishing a tax regime. Their desire to drive cryptoeconomy into the legislative framework entails the removal of the real economy from global processes. It can not only damage reputation, but also cause financial losses of the budget.

Witch example to follow?

Experts believe that authorities need to pay attention to existing practice when drafting Russian legislation in the field of crypto economy.

"At the moment, the most progressive legislative regulation has been developed in Switzerland. It is built on a long tradition of self-regulation and a long history of the financial industry. Switzerland has become a "parking" for almost 50% of the total capital collected via ICO, local experts and companies are launching the largest and most advanced projects. One of the main reasons for it, no matter how ridiculous it might sound, is political stability. The community is well aware that in politically unstable countries, despite the adoption of a different package of laws, the regulator can always roll back the decision. In this case, Switzerland still acts as the main safe heaven for the industry," said Alexei Pospekhov, Head of GR & PR at ICONIC.VC.

What will legislation in the sphere of crypto economy regulation look like in Russia depends on whether the Russian authorities will be able to see the possibilities of new relations and to reasonbly assess all the risks.