Who regulates cryptocurrency?

Question

As we know cryptocurrency is virtual money and can be used for transactions in the UK and many other countries throughout the world. I just wish to know who regulates this global currency?

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Moris Johnsons 3 months 1 Answer 33 views 0

Answer ( 1 )

  1. When we talk about regulations, we think of the traditional form of authority imposed by an entity that has legal control over the concerned domain. In a centralized system, government agencies or corporate owners make the rules and grant permissions to users or other participants. Blockchain has pioneered a decentralized system of making transactions by replacing a custodian or authority that settles transactions among two or more parties with a system that has distributed-ledger and irreversible transactions governed by a consensus mechanism that makes it free from the control of a centralized authority. Cryptocurrencies use blockchain technology and in effect, their transactions are only controlled by the majority of the participating collective via an adopted algorithm, rather than an individual or a small group.
    A consensus mechanism like proof-of-work or proof-of-stake ensures decentralized governance by facilitating validation and record of the transactions on the distributed ledger sustainably while keeping it fair for the participants. In a cryptocurrency such as Bitcoin that uses proof-of-work algorithm, miners solve these problems to come up with a valid hash for the next block. Once the hash has been calculated by a particular miner, the Proof of Work consensus algorithm verifies the hash with nodes on the network. If accepted, the transaction is added to the blockchain and the miner receives a ‘block reward’ as compensation, in addition to any transaction fees within the block.
    Any centralized authority like a government agency or a corporate board doesn’t have any direct control on a decentralized system like blockchain. Due to that, the traditional laws are highly difficult and costly, if not downright impossible, to be enforced on cryptocurrencies. However, if a company is registered in a government’s jurisdiction, that allows a government some leeway to impose regulations on that company on the framework for issuing securities to investors for fundraising. The most illustrative example of that is the new regulations that SEC implemented in 2018 in the United States to bring crypto tokens used for crowdfunding under their regulatory control.

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