Tatiana Koroliuk,
Ph.D., associate professor,
associate professor of macroeconomics and governance department of
Marina Vlasenko,
"Kyiv National Economic University"; email: Maryna_x@hotmail.com
The essence and features of
cryptocurrency as a new type of electronic money, identified the advantages and
disadvantages of functioning of cryptocurrency bitcoin on the market, the
necessity and directions of state regulation
The
development of goods and services market, globalization, information and
computer technologies and Internet communications stimulate the development of
financial innovations that not only influence the functioning of the financial
sector, but also national economy in general. Cryptocurrency is one of these
financial innovations of the XXI century.
Despite
the widespread use and distribution in the world, the definition of economic
and legal nature of cryptocurrency is ignored by both the scientific community
and public authorities that is due to the novelty and underestimation of the
role of the financial instrument.
In
different information sources cryptocurrency is understood as a commodity,
investment equity, and the form of fictitious capital, e-currency, electornic
"golden" etc. However, first of all, cryptocurrency - is a type of
electronic (digital) money based on cryptographic methods, characterized by a
decentralized mechanism of emission and circulation, and acts as an alternative
to paper money. As of 10.29.2016 the world has more than 700 varieties of cryptocurrency
with a total capitalization of US $ 13.5 billion [1]. However, the greatest
demand is owned by bitcoin with capitalization of 11.4 billion US dollars, the
rest cryptocurrencies are derived from bitcoin.
On the official website "bitcoin"
is interpreted as an innovative payment system and a new kind of money
functioning without central government or banks, transaction processing and
emission of bitcoins is collectively performed by the participants of Internet
computer network [2]. In addition to its appointment as currency, bitcoin also
exists as an independent payment system, the protection of which is carried out
using cryptographic techniques [3], and differs from other payment systems by methods
of issue, circulation and currency deposit. So bitcoin – is an experimental
decentralized cryptocurrency that enables instant payments worldwide.
The
main advantages of using cryptocurrency market are: decentralized nature of the
issue and circulation of currency, no intermediaries, a floating currency
exchange rate, used without commission and a high degree of transactions
protection, instant payment and settlement of operations in the most remote parts of the world, no need for conversion
into the currency of the settlement.
Along
with the benefits, there are certain disadvantages of cryptocurrency
functioning market: the need to connect to the Internet and underdeveloped
Internet infrastructure (Internet exchangers, wallets), the anonymity of the
person committing the transaction, the funds may be channeled to the financing
of terrorism, crime, the use of this tool for the legalization of money gained
by crime; the lack of registration of participants and accounting operations,
respectively the control of issuance and circulation of currency; expansion of
the money supply by quasi-money; lack of internal value of the currency and of
any provision; inability to exercise fiscal control; vulnerability to market
conditions and insecurity as an asset; way of withdrawal of capital from the
national economy. Because of the instability of the rate, bitcoin is capable of creating
"bubbles" in the economy, acting as pretext for speculation.
Also,
users do not guarantee the return of money that they have invested in the
purchase of bitcoin since the day exchange rate may sharply fall (or rise
sharply contrary), but this aspect also applies to fiat money at all. Use of
cryptocurrency is based on the consent and trust of members; they don’t act as
the debt obligation of the issuer. However, if this confidence is shaken, then
the system can completely cease to exist.
Due to
the widespread use of cryptocurrency in the world, also in Ukraine, there is the
need to develop updated legal framework regulating its issue and circulation to
minimize the risks and threats to the functioning of the national economy. As it
turns out that the development of financial innovation ahead of the development
of the state regulation system creates uncertainty, increased risks of
financial and economic instability.
Let’s consider some aspects of bitcoin legitimize operations in the
world. In Singapore in early 2014 it was reported that the country's tax
authorities equated bitcoin operations to taxable transactions of goods and
services [4]. In 2015 the European Court ruled that the exchange transactions of
bitcoins to fiat currency is to be exempt from VAT. In China bitcoin is officially
banned at the state level by People's Bank of China [5]. Officially bitcoin was
legalized in California in 2014, it is a full means of payment. There is even
an interactive map that shows the location of bitсoin ATM cash machines in the
state. Bitсoin is officially used to pay for goods and services in Canada, the
UK, in France the government allowed the Bitcoin Central bank to open deposits
and transfer money both in euros and in bitcoin [6, c. 73-74].
Ukraine has an organization Bitcoin Foundation of Ukraine, which is
actively working on promoting bitcoin in Ukraine. Today a public discussion of
the draft law on the bitcoin legalization is being continued in Ukraine.
However, the National Bank plans to use blockchain technology to implement into
the Cashless Economy project. Today, Privatbank launched the bitcoin for
Ukrainian Internet shops, officially introducing its exchange rate of $ 670/BTC.
In 2015 a first grocery store, which could accept bitcoin payment in 2016 was
opened in Ukraine. One of the Verkhovna Rada deputees said in his declaration
that the part of the money is kept in bitcoins [7]. One of the reasons for
rejection of bitcoin by central monetary authority and bank is the fear of
losing their profits. As bitcoin not only simplifies and speeds up financial
transactions, but also significantly reduces the commissions/fees.
Thus, as
the process of using bitcoin cryptocurrency is running since 2009 and is
irreversible, the government should prepare a regulatory framework for its
regulation. It is necessary to examine the mechanism of cryptocurrency
functioning in terms of advantages and threats that can carry their use to the
national economy, develop rules of issue and circulation of cryptocurrency,
registration of participants and accounting of the transactions to determine
the procedure for taxation. At fist it is a must to introduce administrative and
criminal liability for "laundering" of money through bitcoin.
Cryptocurrency
is often used to purchase prohibited goods, and therefore the state should
monitor these operations and set specific penalties. Bitcoin acts as an instrument
of online business activity, and therefore, like any business activities should
be regulated accordingly. Since it is possible to receive and send bitcoins
only through specialized Internet-wallets, the state should regulate the use of
the second. The experience of New York State shows that local authorities
introduced a license for bitcoin wallets in accordance with international
financial requirements, the so-called bitcoin-license
[8].
Despite
the fact that most countries in the world don’t recognize bitcoin as a full means
of payment (we can assume, through ignorance, unexplorence and conservatism of
views), we believe that Ukraine may receive a number of benefits at the
national level of the implementation of this system of payment.
Bitcoin can become
as alternative to dollar and euro in international payments. Special attention
of public authorities must be paid to blockchain technology study, which built
actually bitcoin market, including opportunities to use in anti-corruption
policy, the development of Smart City, Smart Contracts and more. If to provide
full transparency of bitcoin transactions, develop institutional field of cryptocurrency
market functioning and to reduce the existing shortcomings, the use of the
payment system at the same time is able to increase the effectiveness of public
policy.
Lliterature
1. Crypto-Curancy
Market Capitalizations [Electronic resource]. – Access mode: http://coinmarketcap.com/all/views/all/ (Access date 29.10.2016)
2. Official site of Bitcoin [Electronic
resource]. - Access mode: https://bitcoin.org/uk/ (29.10.2016 р.)
3. Satoshi Nakamoto. Bitcoin: A Peer-to-Peer
Electronic Cash System. — 2008. — 9 p. [Electronic resource]. - Access mode: https://bitcoin.org/bitcoin.pdf (Accessed
30 October 2016)
4. Singapore plans to legalize Bitcoin
[electronic resource]. - Access mode: http://www.plusworld.ru/daily/singapur-planiruet-legalizovat-bitcoin-574/
5. Central Bank of China has forbidden banks
operations with Bitcoin [electronic resource]. - Access mode: http://www.vedomosti.ru/finance/news/2013/12/05/cb-kitaya-zapretil-bankam-operacii-s-bitcoin#/ixzz2myQN49z2
6. Molchanov E. Global service nature of modern
crypto-currencies / E. Molchanov, Y. Solodkovskyy // International Economic
Policy. – 2014. - № 1(20). – С. 60-79, с. 73-74.
7. Official website
of online magazine ForkLog [electronic resource]. - Access mode: http://forklog.com (30.10.2016)
8. Michael J. Casey "NY Financial Regulator
Lawsky Releases Final BitLicense Rules for Bitcoin Firms" // The Wall
Street Journal. - 2015. - Режим доступу:
http://www.wsj.com/articles/ny-financial-regulator-lawsky-releases-final-bitlicense-rules-for-bitcoin-firms-1433345396
No comments:
Post a Comment