Echoing the Internet of the mid-1990s, digital currencies will benefit from greater regulatory clarity

In the early days of the Internet, some early adopters held the view that ‘Cyberspace’, as it was often referred to then, would always be a decentralized force free of any governmental intervention. This sentiment was perhaps best exemplified in ‘A Declaration of the Independence of Cyberspace’, a paper distributed by the Electronic Frontier Foundation (EFF) in response to the Telecommunications Act of 1996 being passed into law by the United States Government . In the paper, John Perry Barlow, a founding member of EFF, addressed ‘Governments of the Industrial World’ by stating the following: “I come from Cyberspace, the new home of Mind. On behalf of the future, I ask you of the past to leave us alone. You are not welcome among us. You have no sovereignty where we gather.”

Perhaps unsurprisingly, these utopian — and, in hindsight, entertaining sentiments — were quickly dispelled as governments began to sanction Internet activity in their respective jurisdictions. Over the past 20 years, the Internet has become a highly regulated space with numerous control points subjected to legal intervention. The high degree of regulation has coincided with the Internet achieving mainstream adoption, yielding immeasurable economic and societal benefits for the world at large.

Since the emergence of blockchain-based digital currencies, a new wave calling for a departure from legal systems began to surface once again, echoing the sentiments of the Internet’s early adopters in the mid-1990s. The anarchical streak that has long characterised some segments of the digital currency community is bound to be dispelled sooner or later in favour of a new breed of digital currency initiatives that seek to define appropriate regulatory oversight.

COTI is one such initiative. The COTI team has adopted the position that digital currencies will yield the greatest benefits to society if digital currency initiatives — whether exchanges, wallets, or token issuers — contribute actively to help shape digital currency-specific regulatory frameworks. Moreover, COTI believes that digital currency initiatives with an interest in seeing digital currencies achieve mainstream levels of adoption should pre-emptively implement AML (anti-money laundering) and KYC (Know your Customer) procedures at banking industry standards.

COTI has entered discussions with several regulators around the world with a view to contributing to the dialogue surrounding the current and future state of digital currency regulations. More stringent regulation of digital currencies is inevitable, so the COTI team aims to ensure that new regulations are designed in such a way that they can support innovation rather than constrain it. Clear, well-designed regulatory frameworks will be a catalyst for the mainstream adoption of digital currencies.