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How Crypto Regulations Can Reduce Wealth Inequality - Article Review

A recent article on Barchart discusses how blockchain technology might provide a solution to the issue of wealth disparity. According to the Mayor of Miami Francis X. Suarez, “Most people who are poor have their money in a bank account that earns negligible interest. With the rapid inflation that we have, the people are losing purchasing power – they’re actually becoming poorer”. By contrast, if you had a crypto account, you could get a U.S. stablecoin – a form of digital currency pegged to assets like U.S. dollars or gold – with a yield of 5% to 6%.

Another reason is that cryptocurrency is much more accessible than traditional banks, especially in emerging markets where large populations often find themselves unbanked either due to lack of infrastructure, or documentation, or exclusion based on social standing, gender, religion or political viewpoints. Moreover, cryptocurrency can help to reduce the wealth gap by providing users with access to different financial instruments. In this way low-income users can easily earn interest on their holdings, lend out or borrow money.

Finally, cryptocurrencies combine important properties to foster trust, such as accountability and transparency which means that it is safe to use and difficult to steal. A new study has shown that as much as a sixth of foreign aid intended for the world’s poorest countries has flowed into bank accounts in tax havens owned by elites. Blockchain technology, on the other hand, can help to transfer money directly as well as provide a way for donors to track how their contributions have materialized.

However, using cryptocurrency as a tool for shortening the gap between the wealthy and the poor is possible only under the implementation of smart blockchain technology regulations. Although governments are making efforts to bring regulatory clarity to the crypto industry, the blockchain technology sector is still overlooked. There is still suspicion and hesitation, which has caused some policymakers to push back against blockchain technologies, including regulatory and legislative actions. The adoption of adequate and customized legislation, alongside the consumer protection and transparency it delivers, is the best way forward for crypto and its billions of users. Read the full article following the link below.