Cryptocurrency Regulation is the most debatable topic with plenty of experts’ opinions in the ecosystem. One set of experts believes that regulation means more stability in the volatile crypto market. While others say, regulation might hinder innovation and kill the spirit of cryptocurrency where decentralization is the core feature. So, let’s find out the possibilities, threats, and trends related to crypto regulation.
Does Crypto Ecosystem need Regulations?
Over the last two years, Cryptosphere has witnessed exponential growth in a number of crimes and scams. According to the 2022 report of Chainalysis, the scammers took away crypto worth $14 billion in 2021 which was recorded at $7.8 billion in 2020. Alongside, more than 17000 Altcoins which are more volatile and speculative in nature come with a higher risk of crypto crime.
To safeguard the ecosystem from frauds and mishappenings the crypto participants shall practice good digital security habits. These practices include using a hot or cold wallet for enhanced safety and keeping track of the wallet key. Alongside, it is believed that a bit of regulation can do some good to the entire ecosystem.
Is Crypto Regulation Good for Investors?
The studies and surveys show that majority of experts believe that crypto regulation is a good thing for long–term crypto investors. Some of the key benefits regulation can bring to crypto investors are as follows.
Cryptocurrency is a highly price-sensitive asset class where regulations are seen as a potent way to stabilize the market. Moreover, it may reduce the risk of cryptocurrency for cryptocurrency investors. There would be fewer chances of speculation which will attract well-educated and aware investors to the ecosystem.
Improves Investor Protection and Confidence
Usually Crypto investors have little or no protection for their digital asset. These days some crypto exchanges like Coinbase, Gemini, etc are complying with the evolving federal and state regulation to create a sense of security. However, these regulations are nowhere similar to that of public stock exchange, therefore the protection still remain a big concern for crypto investors.
Safer Crypto Ecosystem
No doubt the high return on cryptocurrencies is the biggest point of attraction for crypto investors but the lack of policies and laws make it the burgeoning area for scam, fraud, market manipulation and rug pulls. Thus, the Crypto ecosystem is the “Buyer Beware Essential” market where regulations may introduce some safe games in the ecosystem.
What’s Next In Crypto Regulation?
The rise in the mainstream adoption of Cryptocurrency in 2021have led to a heated debate on the role of government in this unregulated sector. Since the policies are not yet devised clearly this has left the industry guessing. According to the reports President Biden signed off new crypto legislation with the taxation policies with a $1.2 trillion bipartisan infrastructure bill. Furthermore, the Federal Reserve is toying with the plan of issuing US Digital Currency. On the other hand, Stablecoin is believed to be the first cryptocurrency to be regulated. India has already taken cryptocurrency into the tax bracket indicating the strict regulation on the same.
The debate relating to crypto regulation seems to be the never-ending one unless the regulations are clearly defined by the authorities across the globe. The unadventurous crypto investors prefer the invasion of government authorities in the ecosystem while the risk-taker and adventurous investors want the spark and spirit of the cryptocurrency to stay playful as the government regulation may disturb that. As a result, the authorities need to ensure that invasion of regulations shall not interfere with the idea of decentralized digital assets.