Cryptocurrencies are here to stay, and no amount of denial will change this fact. About 6.9 billion people have access to smartphones, and almost all of them can access the internet in one way or another. Everyone is a potential crypto user, even in regions where these assets are still unregulated.
Are Bulgarians already using crypto? Absolutely. The Bulgarian government was, at one point, the world’s second-largest crypto owner (with about 213.000 Bitcoin in their possession). The value of this stash was, again, at the moment, about 804 million USD.
Now, while MiCA is still in the making, it will, beyond doubt, be relevant to Bulgaria (even though the country has yet to adopt the euro). Still, there are many compelling reasons why countries all over the globe would want to adopt, regulate and start using crypto as soon as possible. Here are some of these reasons (for Bulgaria and everyone else).
- Consumer protection
The most important thing about consumer protection is the aspect of consumer protection.
First, by regulating properly, you can require cryptocurrency exchanges (and other services using crypto) to adhere to specific security measures. These can be measures like:
- Secure storage of user funds
- Regular security audits
- Robust encryption
Then, you can insist on customer verification through official means and introduce many mandatory anti-fraud measures.
Most importantly, you can create an environment with several dispute-resolution mechanisms by regulating. You can enforce complaint procedures, increase the involvement of regulatory authorities, and even include ombudsmen.
This also protects the local economy. Just think about it, the majority of scammers are outside of Bulgaria, which means that money that leaves the country stays out, and since there are no legal mechanisms for retrieving these funds, the thing is settled.
You need regulatory oversight and enforcement, and you can’t have either of these things before properly regulating the field.
It’s hard to tax an asset you still haven’t regulated. Sure, you can tax their income once they convert/sell their crypto locally; however, what about tax compliance on cryptocurrency-related activities?
Once cryptocurrencies are listed as taxable assets or income, countries will have a lot easier time generating revenue from capital gains taxes, transaction fees, etc. However, ensuring crypto users fulfill their tax obligations is incredibly hard before proper regulation is introduced.
The thing is that crypto already exists in Bulgaria, and it’s already widely used; the only difference is that the government and society don’t benefit from it as much as they could.
While some people are confident enough to invest even in meme currencies, others struggle even with better-established tokens. The solution to the problem is really simple – if cryptocurrencies were regulated better, people would find investing easier.
You already have stablecoins tied to major currencies like USD, GBP, and EUR. These are designed to inspire investor confidence and allow people to build up confidence in this digital asset. However, people are already aware that these coins are unregulated, which causes quite a bit of commotion in investor circles.
Just remember that a regulated asset isn’t necessarily of low volatility either. Some tokens (even when regulated) will always be more volatile than others. Still, this is an opportunity for some people to increase their wealth by investing with a higher level of risk.
Previously, you could send crypto from one end of the globe to another without much trouble. It usually took a few seconds, and the fee was quite low. Most importantly, the money was near-impossible to trace. This made cryptocurrencies suitable for all sorts of illegal transactions and money laundering. In fact, before the 2017 explosion of Bitcoin, this asset type was mostly known for online black market dealings.
While this is no longer the case, this dark crypto age remains. With regulation, monitoring and analyzing transactions will be much easier. This leads us to a whole new problem – anonymity is the name of the game. One could argue that it’s a major part of the cryptocurrency appeal.
Without regulation, there’s no licensing of cryptocurrency service providers, which means there’s no direct government oversight. Since this is an international problem, you need an agency that will cooperate with government agencies from other countries. Only through global cooperation and information exchange can this problem truly be solved.
A lot of businesses depend on crypto and revolve around it. Many people (affluent people) choose countries they plan to move to based on their crypto regulations and policies. This means that being one of the first countries to regulate crypto and do so in a crypto-friendly manner, you can become a hotspot for this migration.
Crypto regulation is so scary because it’s imminent in many countries, and most crypto investors don’t know what direction it will take. This is why a country that already has it sorted out offers a layer of stability that matters so much.
Another point worth addressing is investor protection. With the right regulation, you can set clear rules and standards for crypto exchanges operating in the country. This way, you can reduce the risk of market manipulation. Once cryptocurrencies become an even bigger percentage of the local economy, the importance of this will be even greater. All in all, the scalability is great.
Remember, doing something is not enough; you want to be the first to do it. This means that even when the rest of the world catches up with crypto regulation (like they are bound to), you might find yourself in a situation where your investors don’t find switching cost-effective.
Cryptocurrencies are projects which hire so many people. Now, the Bulgarian education system is more than decent, but specialists leave the country at an unprecedented rate. This is why, by regulating crypto, you could partially turn this trend around by allowing younger, more tech-savvy Bulgarians to find jobs with salaries that are competitive with those in the West.
By regulating, subsidizing, and attracting investors, Bulgaria could, one day, become the Silicone Valley of Southeastern Europe. It’s surprising how little effort it takes to implement this, but it can’t happen without regulating it first. These subsidies and investor-attracting programs need to come from government organizations. With current affairs, such a thing doesn’t seem likely (or possible).
One thing that often gets overlooked is regulatory clarity. This makes some innovators work very hard to discover loopholes that they can exploit. Naturally, the government regulatory bodies eventually catch up, often making their development useless. With higher regulatory clarity, these instances can be significantly reduced in number.
Also, there’s no development without communication and collaboration. If the field is not regulated, many people won’t be willing to touch it with a ten-meter pole. By regulating, you’ll open the area to a massive influx of talent.
Look at it like this – citizens of Bulgaria are already using crypto. Even the government holds a surprisingly high quantity of Bitcoin. In other words, the use is there; it’s just the regulation that’s lacking. Also, there’s no going back. Sure, we don’t know what the future of crypto regulation brings, but outlawing it or dropping its use entirely is completely out of the question. This is especially true when concepts like DeFi and technologies like the blockchain have so much to give.