Crypto regulation has been a hot topic for several months now. Investing in cryptocurrency is not only exciting but rewarding when done correctly. However, with many crypto scams and fraudulent activities surrounding this digital currency, government bodies are seeing the requirement for standardized rules.
Here are the basic details regarding the topic and how it will affect crypto investors.
Does Crypto Need Regulation?
Volatility has become one of the main features of cryptocurrency. While many see this as a draw for investors, it can also be considered a huge potential risk. We’ve seen plenty of crypto projects initially soar yet end up crashing and burning, leaving numerous investors losing their hard-earned funds.
See also: Stablecoins vs Volatile Coins Defined
Legislators aim to provide investors with long-term protection from rug pulls and fraud prevention within the crypto sphere through regulation.
Legislation for Crypto Regulation
Currently, there are no clear-cut rules for dealing with cryptocurrency and the blockchain, as it’s technically still in its growing stages. However, legislators in the US and abroad are working on policies to manage this emerging market. These include monitoring, possession requirements, and taxation.
The US government has tasked existing regulatory bodies like the SEC to develop crypto regulation standards. Other countries, like Canada and the UK, are proactively developing their own set of rules on handling crypto transactions.
Effects of Crypto Regulation
As with every effort to regulate anything, it comes with several benefits and setbacks. Here are some perceived results once crypto regulation is fully implemented:
Pros:
Better market stability
Speculation mainly prevails in the current crypto market, which could deter long-term investors due to its volatility. Once regulations are in place, they can reduce speculation and attract more investors.
Increased investor protection and confidence
Crypto regulation will require exchanges and projects to comply with regulatory standards protecting investments from outside manipulation.
Tamer crypto market
With crypto growing exponentially over the years, the number of crypto scams has also increased. Regulation will help track projects and transactions, strengthening already existing security standards and further discouraging scams due to the consequences.
Cons:
Hindrance of innovation
Many see crypto and the blockchain as the new frontier with unbound possibilities. The impending regulation might stop pursuing innovative projects, as the limits may place a hard cap on what developers and investors may do.
Lack of excitement
Once limits are in place, there could be a decline in volatile coins in the market. Thus, the potential for unlimited profits and the thrill some investors seek in crypto may go by the wayside.
Goes against the essence of cryptocurrency
Crypto was created as a decentralized currency format, a response to the limitations of traditional fiat currency. Regulation detractors say that regulating crypto goes against the principal tenants on which crypto was established.
Should You be Concerned with Upcoming Regulations?
As a crypto investor, there’s nothing to worry about regarding crypto regulation. Just remember to keep an eye out for updates so that you won’t be caught by surprise. One way to prepare for these regulations is to invest in stablecoins like the ETHi token.
