Cryptocurrency firms have been coming together and forming self-regulatory organizations (SRO). These entities aim to enhance ethical individual governance in Crypto firms. In some quarters, the SROs are deemed to be the answer to reducing government regulation of Cryptos.
Regulating Crypto’s Is Necessary
Although Cryptos are less volatile in 2018 than their peak volatility of 2017, many still view them as a “wild wild west”. This is because, every day, the world is learning a thing or two
about Blockchain technology and its features such as Machine Learning, Artificial Intelligence, Robotics, Big Data Analysis, Internet of Things, and so much more. These subfields are getting more complex as developers from all over the world offer their unique designs to the world.
These uncertainties along with other factors have been contributing to the volatilities that continue to hit the Crypto markets from time to time, usually with different outcomes depending on the positivity aspect.
Furthermore, rogue characters have been taking advantage of the unknown technology to swindle unsuspecting investors through phony ICOs, pyramid Crypto schemes, falsified/nonexistent Blockchain platforms, etc.
In this regard, regulation is deemed as necessary not only to curb the rife malpractice but to steer Cryptos into stability for them to withstand volatilities and gain widespread acceptance.
However, Government Regulation Raises Market Jitters Unlike SROs Actions
Government regulation raises mixed reactions across expert fields. However, in the Cryptos, many agree that regulation will destabilize the technology by slowing down the development pace. In fact, examples from China’s Communist Government Ban of Cryptos, India’s RBI ban, US SEC actions, etc. government regulation seems to be turning the table on investors.
To offer guidelines to the government, SROs establish their own rules and ethical practices. The SRO regulations, since they come from Blockchain firms, enable regulators to get a perspective of what they are dealing with and to shape policies in a win-win strategy for investors, firms and the governments.
The main motive of SROs has been to discourage legislators and policymakers to regulate Cryptos but since this prospect is already dead on arrival, the SROs instead act as an advocacy group that speaks on behalf of Blockchain firms. In this perspective, SROs have ensured that the government does not reverse the gains that have been achieved by firms.
SROs Started In Japan And Is Now Replicated Elsewhere
In July 2014, Japan Association of Digital Assets (JADA) became the pioneer for SROs. It was later replaced by Japan Blockchain Association (JBA). The SROs is believed to have played an instrumental role in the formation of the Japanese Virtual Currency Act (VCA) in 2017. The VCA, through insights from JBA, legalized Bitcoin and Ether in Japan and has also contributed to the mass adoption of Cryptocurrencies and Blockchain Technology in Japan. The country has been a major contributor to the 2017 boom and the ongoing recovery of Crypto markets.
Outside Japan, Winklevoss VCA is the latest SRO in the US. There is confidence that the new association will influence the SEC to craft Crypto-friendly policies.