High-growth economies lead the way in crypto regulations | Opinion

by

As a researcher and a seasoned professional with a background in environmental economics and sustainable development, I have seen firsthand the potential that digital assets hold for emerging markets. The United States has undeniably been a trailblazer in many areas, but when it comes to crypto regulation, it seems to be lagging behind.

As a researcher examining the global landscape of cryptocurrencies, I’ve noticed that while the U.S. is widely recognized for its financial and technological prowess, it has faced challenges in recent times when it comes to creating clear-cut and consistent regulatory structures for digital currencies.

The vague nature of the situation has given rise to other nations, notably in the Middle East and Asia, to seize the initiative. Rapidly developing economies within these regions are establishing regulations specifically designed for digital assets, which frequently prove more efficient than Western counterparts. These laws serve as a blueprint for other countries to emulate. If the West fails to respond, it risks falling behind as the cryptocurrency sector moves its focus.

The US should not be the blueprint for regulations

For several years now, the United States has faced challenges in governing the cryptocurrency sector, as regulatory bodies like the Securities and Exchange Commission (SEC) have occasionally adopted aggressive and contradictory strategies.

International news outlets reported on significant legal battles involving Ripple and Coinbase, causing a wave of uncertainty and prompting some cryptocurrency companies to relocate to more favorable jurisdictions. The lack of definitive regulations from the Securities and Exchange Commission has left entrepreneurs and investors treading carefully, unsure if their actions might lead to legal complications.

One significant challenge arises from the fact that the U.S. has been attempting to apply traditional laws, such as those governing securities and commodities, onto digital assets. These legal frameworks weren’t initially devised with cryptocurrencies in mind.

The election of a pro-crypto Congress in the U.S. offers promise for advancement, but it’s clear that the nation has some ground to make up. Continuing to wait for America to establish the benchmark is no longer practical given that other countries are already taking the lead in this area.

Emerging markets are the hidden gem of regulations

For now, dynamic economies like Indonesia and Malaysia are adopting a fresh perspective on cryptocurrency governance. Instead of viewing digital assets as adversaries, they are treating them similarly to conventional assets, recognizing the need for proper regulation.

Instead of spending years debating whether cryptocurrencies like Ethereum (ETH) are securities, Indonesia’s Commodity Futures Trading Regulatory Agency, known as BAPPEBTI, made a decision in 2019 to classify all digital assets as commodities.

In Malaysia and Indonesia, regulatory bodies have established rigorous frameworks for cryptocurrency exchanges. These frameworks include stringent licensing criteria, robust investor protection mechanisms, and strict anti-money laundering measures. This has led to a significant reduction in fraudulent activities and an increase in trust within the system, making cryptocurrency transactions safer and more appealing for all users.

As we embark on a wider embrace of web3 technology worldwide, this is the degree of understanding and interaction we must strive for.

Consequently, it’s clear that the crypto market in Asia is flourishing. For instance, during the period from January to October 2024, the Indonesian crypto market recorded transactions worth over $30 billion – marking a significant 350% rise compared to the previous year. This places Indonesia as the third-largest country globally in terms of cryptocurrency adoption, just behind the U.S. Interestingly, six out of the top 20 countries for crypto adoption are located in Central and Southern Asia and Oceania, demonstrating that the crypto sector is a diverse, multi-centric industry.

Emerging markets lead in crypto utility

As a researcher, I’ve noticed that high-growth markets appear to have more sophisticated cryptocurrency regulations compared to others. This could be attributed to the fact that the practical applications of cryptocurrencies are more evident and widely embraced in these regions, making their utility stand out more vividly than elsewhere.

Crypto addresses several pitfalls, such as high remittance costs and limited access to owning assets and investing. On average, remittance fees are around 6.65% of the amount sent, which can take a big portion out of what workers send back to their families. In the Philippines, remittances make up nearly 10% of the country’s GDP, showing just how important they are.

In simpler terms, digital assets like cryptocurrencies can act as a protective measure against inflation, just as gold has been in regions such as Asia and the Middle East. Gold, historically, has been a secure and consistent asset that maintains its worth over time. However, acquiring physical gold can be complex due to high initial costs, storage problems, and limited availability for ordinary individuals. Cryptocurrencies make it possible to create tokenized versions of gold, allowing consumers to purchase a fractional, digital piece of gold at a significantly lower cost. This reduces the barriers to entry, making it more accessible for everyday people.

In rapidly expanding economies, the regulations regarding cryptocurrencies aren’t flawless yet, and it might take a few additional years before they become more extensive. However, these markets recognize that an effective regulatory framework cannot be generic, and they are developing rules specifically suited to genuine digital asset applications.

The future of crypto won’t be defined by Wall Street or Silicon Valley. It will be defined by the people who can use crypto daily to solve real-world problems and address the pitfalls of traditional finance. Which is exactly what crypto was made for.

Mohammad Raafi Hossain

Mohammad Raafi Hossain serves as both CEO and co-founder for Fasset, a fintech company specializing in digital assets that aims to promote financial inclusion within developing nations. He is also part of Own’s initial team for their L2 project. Prior to starting Fasset, Raafi provided technological advice to the UAE Prime Minister’s Office and collaborated with the United Nations on sustainable development initiatives in the Middle East and North Africa (MENA) region. With a background in Environmental Economics and Sustainable Development, Mohammad earned his academic degree from both the University of California, Berkeley, and Harvard University.

Read More

2024-12-28 16:12