By David Drake
The Asian market, and other crypto-friendly islands have experienced massive growth over the last several months. In August this year, Singapore outperformed the US in terms of successful ICOs for the first time. The country has relaxed regulations with zero governmental interference. This has made Singapore a fertile ground for cryptocurrency use despite the fact that the government does not recognize digital coins as legal tender.
On the contrary, the US has been cracking down on the cryptocurrency market heavily using traditional regulations that largely apply to the securities market. This has caused legitimate businesses to turn to foreign markets for support. Even so, cryptocurrency regulation isn’t the only challenging facing the US market.
Early this year, media giants – Facebook and Google, alongside Twitter and Snapchat placed bans on all crypto-related ads. This happened at a time when large scale scamming, money laundering, and theft had grown pervasive, resulting in investors losing millions of dollars. Coincheck, the Japanese cryptocurrency trading platform, lost over $500 million dollars in January this year.
This incident may have served as the catalyst for the dramatic decisions made by these companies.
Scope of Reversal
Last month, Google announced it will remove the global ban it placed on cryptocurrency ads. The company originally announced a ban on all ads back in March and effected it a few months later. At around the same time, Facebook repealed its decision to cut all ads relating to cryptocurrencies. Twitter and SnapChat still continue to sustain the ban and will possibly following suit in the coming months.
Like Facebook, Google’s decision to allow crypto ads again isn’t a blanket statement that applies to all cryptocurrency companies. Trading advice and initial coin offerings (ICOs) are still taboo on the site and, despite reneging on its decision, the company maintains restrictions on unregulated companies.
What this means is that only regulated cryptocurrency platforms worldwide can place ads with the company and for starters, these ads will only run in the US and Japan market. To advertise in other countries, companies that are interested in buying ads will have to obtain certification.
While Google has no way of predicting the future, customer behavior trends indicate the cryptocurrency wave has outrun its course. Bad actors are getting increasingly common and, in some markets, they are going global hence the need for tech firms like Google to restrict the use of ads that could perpetuate individual losses from fraud.
Most of Google’s profit margin is directly linked to its online ads. As such, a sweeping ban effectively undercuts these margins despite the fact that it was useful in reducing instances of fraud. Increasingly, individuals and corporations are showing support for blockchain and cryptocurrency, but the market for digital coins won’t experience true highs until US legislators make a final decision.
“Having a clear picture in the US will allow more companies to know how to operate within the US framework of regulation. As it stands, there is a lot of ambiguity which adversely affects the US and the growth of crypto here. Many companies will not operate here due to the possibility of the US over-regulation or banning it outright in the future,” notes ONe Network founder, John Hoelzer.
Further, Hoelzer notes that country needs to create space for the cryptocurrency industry to thrive.
“The US should embrace this market and properly regulate it without being overly burdensome. Allowing a market to thrive as it did during the 90’s and early 2000’s in the Tech sector brought about huge advances in technology, and let a then emerging market flourish and become what it is today. The US cannot afford to lose out on this technological renaissance,” he adds.
The US has the potential to become a crypto giant in the years to come should it puts in place the right cryptocurrency regulation. As blockchain application gains traction, the US stands to lose if it doesn’t keep abreast of the evolving technology and may very well pull down major corporations along with it.
Disclaimer: David Drake is on the advisory board for most of the firms mentioned or quoted in this article.