How Regulations for Cryptocurrencies Can Change the Crypto Market
Despite the widespread acceptance of cryptocurrencies, there is still disagreement about how to regulate them. Investors are at a disadvantage compared to stock traders and investors due to the absence of laws for cryptocurrencies.
For instance, stocks are heavily regulated, shielding investors from hazards like theft and fraud, among others. The lack of government rules for cryptocurrencies, however, makes it less certain and more dangerous.
Without a question, cryptocurrency traders, investors, and aficionados like to use it unrestricted. Cryptocurrency fans, for instance, may swiftly and cheaply convert ETH to USD without the assistance of a middleman.
Regulations, however, will surely make things better because they are the last thing the cryptocurrency market needs to be established. The current position of cryptocurrency rules is examined in this article along with how they may affect the industry.
How is the regulation of cryptocurrencies coming along in 2022?
The discussion about the government’s role in regulating cryptocurrencies grew as cryptocurrency popularity among the general public increased. Although some nations have regulated cryptocurrencies and moves to do so are being approved, there are no set guidelines.
Since the crypto business is kept in the dark as a result, more digital currencies and tokens are still being released. However, Tally Greenberg, an expert, claims that as blockchain and cryptocurrencies have no historical precedence, no policies have yet been developed.
However, current discussions on cryptocurrency regulation in 2022 indicate that the question is not whether there will be regulation but rather when. For instance, the bipartisan infrastructure package included new cryptocurrency laws that were approved by US President Joe Biden. The Federal Reserve is also thinking about creating American digital money.
Even if cryptocurrency regulation doesn’t address the market’s high volatility and speculative problems, it will surely increase market stability.
Overall, regulators are responding favorably to the lightning-quick growth of the bitcoin business. Regulators all around the world are becoming actively involved in regulating cryptocurrencies instead of just tolerating cryptocurrency investing, trading, and issuance.
Regulators are ready to take the initiative to shut down non-compliant cryptocurrency trading or investing operations or merely levy penalties. They don’t want to stifle economic growth since they understand how beneficial this innovation can be.
Which governmental agencies will oversee cryptocurrency regulation?
Government agencies and regulators are beginning to actively participate in the cryptocurrency markets in many regions of the world. For instance, in the fourth quarter of 2021, FINMA (the Swiss Financial Market Supervisory Authority) authorized its first bitcoin fund.
Additionally, BaFin (Germany’s Federal Financial Supervisory Authority) just gave out its first license for holding, trading, or investing in bitcoin. Some ETFs, which debuted in October 2021, received approval from the Securities and Exchange Commission in the United States in the interim.
Meanwhile, these cryptocurrency-based ETFs have already received approval from nations including Brazil, the Nordics, Dubai, and Canada. The UK, India, Sweden, France, Germany, Hong Kong, and China are among the several central banks that are examining CBDCs.
While El Salvador enacted legislation making Bitcoin legal money, Nigeria previously introduced its CBDC, the air. So far, just two nations—El Salvador and Japan—have recognized and accepted cryptocurrencies as legal cash.
What Aspects Of The Cryptocurrency Market Can Regulations Change?
Any sector benefits from regulations, and the bitcoin market is no different. Large organizations and well-known institutions are hesitant to invest in cryptocurrencies due to their lack of regulation.
According to experts, legislation should provide a framework in place of disclosures, since this will promote openness in investments as a whole. Institutional investors need transparency in many different ways, especially given how they naturally manage risk.
Large institutional investors can handle larger bitcoin investments because of laws and transparency, which can help maintain the value of digital assets. The volatility of bitcoin prices is one of its flaws and the subject of cryptocurrency news most frequently.
Even the prediction by certain media sites that the price of Bitcoin would drop to zero will be enough to put off investors. However, a group of specialists thinks that rules might assist in addressing the volatility issues with cryptocurrencies.
When cryptocurrencies are regulated, there will be a significant influx of money, which may lead to a stabilization of regulated crypto prices. Investors who previously had doubts about investing in cryptocurrencies will as a result start considering them seriously, thus boosting value and stability.
Experts soothe investors who worry about cryptocurrency laws by stating that the concerns about the price of cryptocurrencies are unrelated to the impending regulation. Experts believe that global macro reasons are more responsible for the recent decline in the value of digital currencies.
Regulating cryptocurrencies would surely encourage more people to become investors and to learn how to acquire and trade cryptocurrencies. Government officials were vehemently opposed to the concept of bitcoin just a few years ago.
Many people nowadays are contemplating or lobbying for regulation of it since they recognize its advantages and ability to support economic development. Despite the worries surrounding the cryptocurrency industry, regulation can address the majority of these worries, leading to the emergence of new crypto leaders.