IOTA: Is regulatory encryption the answer?
In the 1800s, people flocked to the West, blinded by the gold rush and the opportunity to get rich overnight. In modern times, encryption has become its own wild west. In a lawless world, everything is possible. At least this is the voice of the encryption myth.
The crypto world is centered on a decentralized community. The impetus for crypto development comes from the enthusiasm for empowering users through decentralization and autonomy. However, these factors also attract the dark side of users. The freedom that anonymity and lack of regulation bring is the perfect secret to criminal activity, not to mention the number of scams that ruthlessly take away the money of careless investors.
When released, the potential for encryption is huge, but can it be implemented in a way that does not disrupt the system? How to foster innovation while maintaining the inclusiveness and fairness of encryption? The answer lies in a basic question: to regulate or not to regulate encryption?
New regulations will be introduced soon
Regulations establish order, which means that a department can operate more safely and achieve predictable results. Like any other industry, encryption regulations will standardize the rules of the game and provide a safer environment for investors and users alike.
With the vigorous development of the encryption industry, regulation is inevitable. One of the most important regulatory projects, called MiCA (Encrypted Asset Market), looks to be launched in the European Union in 2024.
The European Commission adopted a new digital finance package in 2020, preparing to change the European economy in the coming decades. The package aims to improve the competitiveness of the European fintech sector and technology, while reducing risks and ensuring the financial stability of the European economy.
The European Commission announced that they created MiCA to ensure that EU consumers can obtain innovative but secure encrypted assets without affecting market stability. Protecting crypto users can be said to be its primary concern, which must be balanced with the need to promote cutting-edge investment products with regulatory and financial risks.
The positive significance of supervision
Although regulations have brought a certain degree of clarity to the unregulated crypto world, there are concerns that the crypto industry may be negatively affected by the constant changes in the regulatory environment.
Regulations may directly affect the innovation and growth of the market, but not everyone is pessimistic about the law in the encryption field.
In an exclusive interview with DailyCoin, Dominik Schiener, co-founder of the IOTA Foundation, emphasized the importance of regulations and their positive impact on the development of cryptocurrencies.
According to him, the encryption space has entered a mature stage. Some of the original disruptive participants who helped the encryption grow are being questioned and may not be regulated.
“New players can enter this field with a new type of framework. We will get a new regulatory framework, which increases the clarity needed for adoption, or will add more requirements for some existing players, right?” IOTA The foundation aims to establish a new digital economy by redefining how people and devices connect to share the information and value of encryption technology. By creating standardized and open source technologies, the foundation emphasizes trust and transparency in managing the Internet of Things.
IOTA changed the traditional blockchain design and developed a new technology platform called Tangle. Tangle is a distributed ledger technology specifically designed to run in an IoT environment.
IOTA strives to become a standard for the Internet of Things, so Schiener emphasizes that government regulations and recognition are the keys to their expansion and adoption in the real world.
Schiener emphasized that large companies are enthusiastic about adopting encryption technology, but they raise the same questions about taxes, standards, transaction fees, and other legal issues. Schiener firmly believes that regulations will bring clear information to all participants and accelerate adoption.
IOTA is already working closely with the authorities to create different technological solutions, such as the European Union’s Gaia-X project, and working with the East African government to produce paperless trade solutions.
“I think one of our next major phases is to get more government recognition, as we have seen in Germany and Europe. Although it takes a lot of time to adopt in the corporate world, it is ultimately worth it because it is In my opinion, most of the transaction volume will happen in the future.”
Bring clear but non-standard innovation
The biggest challenge facing regulators is how to strike a balance between providing the necessary support for the vigorous development of the ecosystem and regulating market innovation.
Schiener is optimistic about the EU’s future regulations because they will provide the market with the necessary clarity, such as the classification of tokens and taxes, but he makes important distinctions. According to him, the technology involved in encryption itself should not be regulated because it will have a negative impact on innovation.
“We shouldn’t say,’Hey, in IOTA, only KYC verified users can participate.” Honestly, we should all throw away this project by then, because it doesn’t make sense then. The only reason IOTA makes sense today is “it is unlicensed. It is open. Anyone can participate.” Schiener suggested that regulation should address the use cases and endpoints of people entering and exiting the crypto ecosystem, not technology. .
“From the beginning, we have been setting banks or financial institutions as gateways to these new crypto economies, and of course they will be regulated.
Some established companies in the encryption field will obtain bank licenses that have already occurred, so they can become their gateways. So this is where it really goes. “
Watch the full interview here:
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