The US Department of Justice has set up certain regulations on Bitcoin that aims to prevent cyber-criminals out there from using the cryptocurrency for criminal activities.
There were attempts made by financial regulators to ban the cryptocurrency, but the Bitcoin regulations definitely seem like the more sensible thing to do.
With more and more countries regulating Bitcoins as time passes by, it is to be noted that these regulations come with certain consequences as well. From the risks involved to the infancy of the cryptocurrency, there are certain factors that work against Bitcoin regulations.
Issues due to regulations
The primary issue faced after implementing these regulations is the fact is the anonymity. Blockchain only assigns a randomly generated key and address of the parties involved. This serves as a huge barrier to Bitcoin regulations, as knowing about the people involved in a particular transaction is impossible.
Hassles for legitimate business
Another problem faced due to these regulations is the fact that they serve as more of a barrier in the path of vigilante security consultants, as it prevents them from doing business in order to protect their clients from cyber-criminals. Vinny Troia of Night Lion Security at one point got involved in paying ransom to the cybercriminals through the clients harmed by cyber attacks like Warcry. On occasions, Troia even had to buy data from vicious hackers in order to verify database breaches.
Troia was not able to provide any authorization from the U.S. Department of Justice for his actions so Coinbase suspended his account.
Bitcoin regulations are an effective way of limiting cryptocurrency. However, every step has its own consequences. The regulations may sometimes work against the good guys out there, as differentiating people will be complex, due to the backbone of Bitcoins, Blockchain. It will definitely be hard to separate the good from the evil.
About the Author
Paul Sciglar is a columnist interested in international policies and economic affairs. Certified Accountant with broad experience in strategic analysis, FP&A, investment banking, and investment management. You may connect with him on Twitter.