After the financial recession of 2008, Bitcoin came up as a solution to avoid recurrence of suck financial meltdowns. The most popular crypto is currently perceived to be the ‘poster boy’ for the entire cryptocurrency and blockchain industries. The nascent technologies have offered both benefits and risks.
The primary feature of the digital tokens that are mostly branded as a benefit is the lack of regulations. However, the increasing number of theft cases and scams has left the cryptocurrency and the legal industry spaces intertwined extensively. Blockchain technology has given investors an opportunity to cut out the middlemen in the peer-to-peer transactions. The traditional middlemen of the financial world include governments and banks.
Although the regulators have not yet designed enough laws to govern the currently murky crypto waters, the criminals are not slowing down. China and several other governments banned most of the cryptocurrency activities within their jurisdiction. Other governments like Switzerland and Bulgaria lead in trying to embrace the new technology. The supporters of blockchain have designed measures to govern it without choking its growth.
Reports show progress in the blockchain and crypto world but controversy keeps spelling doom on the new markets. Just last month, QuadrigaCX, Canada’s biggest crypto exchange, closed down following the sudden death of the CEO. When Ernst & Young gained access to the cold wallets belonging to the now deceased CEO, they found them empty.
The wallets should have contained up to $150 million in cryptocurrencies but all that was there was less than $500, 000. Any system that is administered even partially by humans is bound to errors on some level. Hence, the foreseeable end result is legal action.
Legal Issues Looming Around Cryptocurrency
The past decade saw the emergence of blockchain and cryptocurrency technologies that are threatening to shift the world order. The most affected industry by the emergence of these technologies is the global financial sector. These technologies have provided companies and private investors with a variety of exciting opportunities.
Nonetheless, these many benefits have come with a generous pile of risk. Despite being around for ten years now, crypto still operates in largely unregulated international legal grounds. Most of the legal infrastructures that currently try to regulate cryptocurrency existed way before the same cryptos existed.
Investors try to navigate the legal issues surrounding the crypto world. The SEC regulations and compliance requirements come close to offering a solution to the ever-changing cryptocurrency activities. However, the dynamics shift rapidly rendering some of the new laws almost ineffective to the digital assets group.
The evolution of digital tokens offers criminals with new ideas and opportunities to fleece unsuspecting investors. Some of the legal issues that arise include contractual issues and the legal obligations and rights of private individuals and corporate. For now, the watchdogs are still significantly behind but striving relentlessly trying to catch up.
The future is bright for the cryptocurrencies since some stability is gradually finding its way in the markets. The QuadrigaCX case shows some progress of how cryptocurrency and the legal industry relate. When concluded successfully, the case will provide a gleam of hope pointing to a future where the cyber-criminals in the crypto world will never again get away with their illegally acquired loot.