How Cryptocurrency Regulations Could Change Crypto Market
Despite cryptocurrency being widely accepted, regulation is still a topic of debate or battle. Investors are at disadvantage when cryptocurrency regulations do not exist.
Stocks are an example of highly regulated securities, which protect investors from fraud and theft. There are no regulations that govern cryptocurrency yet, so it has less certainty and is subject to greater risk.
It is clear that cryptocurrency enthusiasts, traders, and investors love it. Cryptocurrency enthusiasts can convert ETH to USD quickly and easily without the need for a middleman.
Regulations will undoubtedly make everything better; they are the last element required to create the cryptocurrency market. This article examines the current state of cryptocurrency regulations and what they can do to change the market.
How is it coming along?
The debate about the government’s role in regulation of crypto has intensified as cryptocurrency adoption becomes more mainstream. Although motions have been made to regulate cryptocurrency and certain countries have already regulated it, there is no clear rule.
The crypto industry is now left in the dark, but that hasn’t stopped new digital currencies and tokens being created. Tally Greenberg, an expert on crypto, says there aren’t any policies yet, because blockchain and cryptocurrency have no precedent.
Recent conversations about cryptocurrency regulation in 2022 indicate that it’s not a question of whether regulation will be implemented but when. Joe Biden, President of the United States signed the new cryptocurrency legislation into the bipartisan infrastructure bill. The Federal Reserve is also considering issuing a digital currency to the United States.
Although it won’t resolve the market’s high volatility and speculative problems, cryptocurrency regulation will undoubtedly provide more stability.
The regulators are generally positive about the rapid growth of the cryptocurrency market. Regulators around the world have become more involved in regulation, instead of merely allowing investors to trade and issuing cryptocurrency.
Non-compliant trading or investment businesses are being shut down by regulators. They also can issue fines. They are aware that this innovation could benefit economic development and they don’t want it to be stopped.
Which Government Authorities Will Regulate Cryptocurrency?
Different governments and regulators around the globe are actively participating in cryptocurrency markets. FINMA (the Swiss Financial Market Supervisory Authority) approved the first cryptocurrency fund in its last quarter 2021.
BaFin (Federal Financial Supervisory Authority in Germany), recently issued its first license for cryptocurrency trading, investment, and carry. The Securities and Exchange Commission of the United States approved some ETFs. They were launched in October 2021.
These cryptocurrency-based ETFs have been approved by countries such as Canada, Brazil, Denmark, Sweden, France, Germany, Hong Kong, Dubai, and the Nordics. CBDCs are also being evaluated by central banks in India, China, France, Germany and Sweden.
Nigeria has already launched the eNaira CBDC. El Salvador also passed a law that makes Bitcoin a legal tender. Japan and El Salvador are the only countries that have accepted cryptocurrency as legal tender.
How can regulations change the cryptocurrency market?
The cryptocurrency market is not an exception to the rule that regulations are beneficial for all industries. Large groups and institutions are keen to invest in cryptocurrency, but they are hesitant because it is not regulated.
Experts believe regulation should establish a framework to replace disclosures. This will increase transparency in investment. Institutional investors need transparency in many ways, especially when considering their risk-management nature.
Large institutional investors can manage more cryptocurrency investments through transparency and regulations. This can help stabilize the prices of digital assets. Volatility in cryptocurrency prices is the most common topic in cryptocurrency news. It is also one its strengths.
Many news outlets predict that Bitcoin’s price will fall to zero. This is enough to discourage investors. A group of experts believe that regulations could help to solve the cryptocurrency instability problem.
Regulation of cryptocurrency will result in a huge capital inflow, which can lead to stable crypto prices. Investors who had been skeptical about investing in cryptocurrency may now start to take it seriously, driving stability and value.
Experts are reassuring investors who fear cryptocurrency regulation, stating that the pending regulation is not the reason for the crypto price worries. Experts believe that the current decline in digital currency prices is more closely linked to global macro factors.
The regulation of cryptocurrency will undoubtedly encourage more investors and individuals learn how to purchase cryptocurrencies and invest. A few years back, the government was staunchly opposed to cryptocurrency.
Many people today see the potential of crypto market to help economic development. They are now considering or pushing for regulation. Regulating the crypto market can resolve most of the problems, and new crypto leaders will emerge.