Cryptocurrency has been a popular topic of discussion in the financial world for quite some time now. While many people believe that cryptocurrency is the future of money, lawmakers have expressed concerns over the lack of intrinsic value or social purpose of cryptocurrencies.
Intrinsic value is defined as the inherent value of an asset, which is derived from its usefulness or utility. In the case of traditional assets like gold, it has intrinsic value as it is used in jewelry, electronics, and other industries. However, cryptocurrencies do not have any intrinsic value. They are simply digital tokens that exist on a blockchain network and are traded on various online platforms.
Lawmakers argue that cryptocurrencies lack intrinsic value and are therefore a risky investment. In contrast, investing in traditional assets like stocks or bonds provides investors with ownership in a company or creditworthiness of a company. But with cryptocurrencies, there is no ownership or creditworthiness of any underlying entity.
Besides intrinsic value, lawmakers have also criticized cryptocurrencies for their lack of social purpose. Most cryptocurrencies are not tied to any specific social purpose or agenda. For instance, Bitcoin, the most popular cryptocurrency, was originally designed to serve as an alternative to traditional currency. But it has failed to achieve this purpose as it is now mostly used as a speculative investment.
Furthermore, cryptocurrencies have been associated with illegal activities such as money laundering and terrorist financing. The anonymity offered by cryptocurrencies makes it easy for criminals to move large sums of money across borders without being detected. Thus, lawmakers are concerned that cryptocurrencies may facilitate illicit activities and destabilize the financial system.
In addition, there are also concerns about the lack of regulation surrounding cryptocurrencies. The absence of a regulatory framework makes it difficult for governments to track and monitor the use of cryptocurrencies. This has led to regulators in various countries to issue warnings about the risks associated with investing in cryptocurrencies.
However, proponents of cryptocurrencies argue that they have value as a decentralized form of currency that allows for direct peer-to-peer transactions that do not require intermediaries like banks or credit card companies. Cryptocurrencies also provide users with a level of privacy and anonymity that cannot be achieved through traditional financial systems.
Moreover, the blockchain technology that underpins cryptocurrencies has the potential to revolutionize various industries by providing secure and transparent record-keeping. This can be especially useful in supply chain management, where transparency and accountability are essential.
In conclusion, while cryptocurrencies lack intrinsic value and social purpose, their use cases have been evolving over time. While they remain highly speculative, they have the potential to transform the global financial system and various industries. However, it is important for regulators to strike a balance between promoting innovation and protecting investors against potential risks associated with cryptocurrencies. Until then, cryptocurrencies will continue to remain a polarizing topic in the world of finance.
Lawmakers in the UK have called for consumer trading of cryptocurrencies to be regulated like gambling, saying that Bitcoin and Ether have “no intrinsic value” and “no useful social purpose.” In a new report, the cross-party committee of British politicians pointed out various adverse impacts of cryptocurrencies such as the vast amount of energy consumption, the risk to consumer traders, and the criminal use in scams, fraud and money laundering. The committee has warned against regulating trading as a financial service proposed by the UK government due to public risks. The report has sparked an uproar in the crypto community, as the comparison with gambling is considered unfair. CryptoUK, an industry lobby group, criticised the lawmakers for ignoring evidence submitted by the group and claimed that the comparison with gambling would exclude tens of millions of pounds in tax income from gains made by buying and selling unbacked crypto assets.
However, cryptocurrencies have been facing a tough time lately due to the loss of trust resulting from market turmoil, scandals such as the FTX scandal, and the collapse of stablecoin Terra. In response, governments worldwide are pushing for further regulation of the sector. The European Parliament recently approved the world’s first comprehensive set of rules for crypto-assets, while in the UK, the election of a pro-crypto Prime Minister has sparked hopes that the country will become a global hub for the sector.
But the new committee report shows any such objective will face powerful opposition from lawmakers. Ian Taylor, board advisor at CryptoUK, criticised the evidence provided by the committee and highlighted the sector’s moves to track, monitor and report, mitigate fraud with analytics, and commitment to work closely with regulators and law enforcement. He also added that cryptocurrencies have been crucial for the unbanked, making secure and efficient peer-to-peer payments available to the most vulnerable people in society. The ability to represent financial products such as bonds and equities on a blockchain offers faster settlement times, reduces intermediaries, saves costs, provides new access to markets, increases liquidity, and automation through smart contract technology.
In conclusion, the latest report by a cross-party committee in the UK has sparked an uproar in the crypto community as lawmakers called for consumer trading of cryptocurrencies to be regulated like gambling. CryptoUK has criticised the move, and industry lobby group claims the regulation would exclude tens of millions of pounds in tax income from gains made by buying and selling unbacked crypto assets. However, the report has shown that any objective to make the UK a global hub for the crypto sector will face opposition from lawmakers, while governments worldwide are pushing for further regulation of the sector.