New forms of money are appearing at an ever-faster rate. Is this a positive development or adding risk to the system? Should new money technology face greater regulation and scrutiny?

As progress in

technology

seems to quicken each year, it is inevitable it will start to encroach into new areas

such

as

finance

and even currency.

This

essay will review the modern advancements in the fintech world and determine both the

risk

and regulation situation.

Firstly

it is abundantly clear that

technology

is disrupting practically every

industry

, especially the financial sector.

Finance

has been a relatively stable

industry

for decades and has faced a deluge of regulations in order to manage and mitigate

risk

. Occasionally

technology

outpaces government regulations and new sectors and even new

money

is born.

For

example

, cryptocurrencies

such

as Bitcoin are new forms of

money

based on blockchain

technology

. Due to their newness and relative obscurity, they are often quite volatile and

therefore

often deemed risky.

However

, with

this

new

technology

comes vast new opportunities,

for

example

, someone who holds bitcoin can now deposit it with companies

such

as Nexo and Celsius and gain a very healthy rate of interest, often upwards of five per cent. Not only can they deposit their bitcoin they can

also

get a loan against it,

this

could be extremely useful for those who do not want to sell but need instant

money

.

Although

all these new developments may seem a little risky at the outset one must not forget the global financial crisis of 2008 caused by a so-called highly regulated and ‘mature’

industry

. It is

therefore

clear that

although

these new types of

money

may seem risky, to date, even regulated

finance

is not immune to

risk

and depravity. In summary, given recent historical financial events, it would seem shortsighted, narrow-minded, and almost absurd to even consider that the new

technologies

adversely affect the

risk

equation in modern

finance

. New

money

technology

should be legally treated the same way other financial institutions are treated, or perhaps even more leniently.

Firstly

, it is important that new

technology

gets the opportunity to evolve, mature, and ultimately disrupt the current field.

Although

old

money

transfer companies

such

as Western Union are expensive, due to

technology

they are

finally

facing serious competition from newer entrants.

For

example

, younger startups

such

as Wise.com can

also

transfer funds but at a much more competitive rate, and often faster.

This

company faces similar regulations as the incumbents which protect

users

and prevent nefarious actors from abusing the network. Other

technologies

such

as cryptocurrencies can

also

be used to transfer funds,

however

, at yet even lower rates and faster still.

Although

the regulatory environment has failed to keep up with the pace of blockchain

technologies

it is clear the benefits for consumers are profound. In fact, the sooner the government can legislate the better because

this

would reduce risks and

also

level the playing field between competitors.

For

example

, currently,

users

of blockchain transfers lack the same legal protections and rights as

users

of other companies

such

as Wise.com.

Therefore

it is clear that updating the legislation so as to include new

technologies

would bring fairer competition for the

industry

players and a safer experience for

users

. To conclude, new forms of

finance

such

as cryptocurrencies are possibly riskier for consumers than traditional

finance

,

however

traditional

finance

seems riskier for the entire world’s population. For

this

reason, it is difficult to determine the level of

risk

we are facing. Regarding regulation, new

technologies

should face the same amount of scrutiny as other competitors in the field.

This

should increase safety for all the market participants and even bring about improved services.