Elon Musk has taken the financial world by storm by investing $1.5B US dollars of Tesla in the crypto king Bitcoin.

Cryptocurrency has previously flown under the radar, being deemed an extremely volatile and unstable asset. To many who do not fully understand cryptocurrency, it may appear to be an untraceable form of money used on the dark side of the web. But in actuality, cryptocurrency has become an increasingly popular asset with unfathomable potential going into the future.

Cryptocurrency operates on a decentralised blockchain peer-to-peer network, meaning that no one centralised organisation, such as a government or financial institution, holds this money. This becomes important as it is not affected in the same way as the stock market or the value of fiat currency. Additionally, it operates in an area that has potential for scalability with increased demand and interoperability between online and offline blockchains. Without delving into technical know-how, cryptocurrency offers security, autonomy, accessibility, and reduced fees in transactions.

Following Musk’s bold steps, other key players such as Square, Mastercard and Amazon, have said they will begin to accept cryptocurrency in the coming year. Moreover, larger cryptocurrencies such as Cosmos have attempted to create exchange-traded funds to list on major stock exchanges such as the Australian Stock Exchange. The problem with this is that there are only preliminary laws in place that govern the regulation of cryptocurrency in Australia. Naturally, you might view cryptocurrency like a stock of a company but the major difference between these two entities is ownership, where holding cryptocurrency does not mean you own a part of the cryptocurrency company. As such, many traders and even lawyers have begun calling upon the Australian Securities and Investments Commission “to sharpen its guidance around non-bitcoin crypto offerings.”

As cryptocurrency is determined to play a significant role in the Australian and global economy, it will be imperative that a regulatory framework is built around this to appropriately manage the asset. The Reserve Bank of Australia will conduct wholesale digital currency trials with the Commonwealth Bank and National Australia Bank and report on this in the first half of the year. Additionally, Senator Andrew Bragg proposed a recommendations report concerning the regulation of cryptocurrency to be due in April. It may even be beneficial to view positive regulation by the US Securities and Exchange Commission as well as the European Union or negative regulation by countries that are trying to ban crypto such as India or Nigeria. But one thing is clear, cryptocurrency has broken out of its shell and is here to shake up the financial world.

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