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

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

such

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as

finance

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and even currency.

This

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

risk

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and regulation situation.

Firstly

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it is abundantly clear that

technology

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is disrupting practically every

industry

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, especially the financial sector.

Finance

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has been a relatively stable

industry

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

risk

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. Occasionally

technology

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outpaces government regulations and new sectors and even new

money

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is born.

For

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example

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, cryptocurrencies

such

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as Bitcoin are new forms of

money

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based on blockchain

technology

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

therefore

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often deemed risky.

However

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, with

this

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new

technology

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comes vast new opportunities,

for

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example

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, someone who holds bitcoin can now deposit it with companies

such

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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

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get a loan against it,

this

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

money

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.

Although

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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

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. It is

therefore

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clear that

although

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these new types of

money

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may seem risky, to date, even regulated

finance

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is not immune to

risk

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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

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adversely affect the

risk

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equation in modern

finance

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. New

money

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technology

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

Firstly

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, it is important that new

technology

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

Although

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old

money

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transfer companies

such

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as Western Union are expensive, due to

technology

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they are

finally

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facing serious competition from newer entrants.

For

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example

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, younger startups

such

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as Wise.com can

also

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

This

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company faces similar regulations as the incumbents which protect

users

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and prevent nefarious actors from abusing the network. Other

technologies

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such

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as cryptocurrencies can

also

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be used to transfer funds,

however

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, at yet even lower rates and faster still.

Although

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

technologies

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

this

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would reduce risks and

also

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level the playing field between competitors.

For

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example

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, currently,

users

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of blockchain transfers lack the same legal protections and rights as

users

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of other companies

such

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as Wise.com.

Therefore

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

technologies

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would bring fairer competition for the

industry

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players and a safer experience for

users

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. To conclude, new forms of

finance

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such

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as cryptocurrencies are possibly riskier for consumers than traditional

finance

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,

however

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traditional

finance

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seems riskier for the entire world’s population. For

this

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reason, it is difficult to determine the level of

risk

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we are facing. Regarding regulation, new

technologies

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

This

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