Does The Cryptocurrency Space Need More Regulation?
Cryptocurrencies have opened up the doors to financial freedom for millions of unbanked people and people who did not have access to the traditional banking system. One of the main attractions is the ability to transact anonymously. Traditional banking systems have many strict regulations that exclude a large part of the population. Also, they have custody of your funds and can misuse them in a variety of ways
Cryptocurrencies are attractive to so many people precisely because of the lack of regulations. This lack of oversight has many benefits but they also come with drawbacks. If you have your money in the bank, you don’t have to worry about accidentally losing your funds because you typed in one number of a person’s wallet address by mistake. Also if somebody steals from the bank you are protected by government regulations. With cryptocurrency, you don’t have to go through AML or KYC if you don’t want to. One can make Peer to Peer transactions privately and anonymously. That, however, does not necessarily mean those bad actors can act with impunity but it is a lot easier to cover one’s tracks. Just because a person wants to have anonymity does not mean that they have bad intentions though.
Peer to Peer trading will always be available. But the market, on the whole, needs a certain level of regulation and oversight if it is to flourish. Just a with the internet there will always exist a subculture who exists on the periphery of the general population. But just imagine if the internet had no regulation. It would never have been able to gain mass adoption and have become a part of our daily lives the way that has.
Regulation will allow institutional capital to enter the marketplace.No institutional corporation will want to risk running afoul of the law by entering a completely lawless marketplace. Regulation allows for safe, fair, and reliable market conditions. It also offers protection to the general public who would have had little to no recourse in an unregulated transaction. It establishes standards and rules that prevent bad actors from manipulating the market as easily.
Another factor that regulation can improve is the wild price swings of cryptocurrencies. It is very difficult to gain mainstream acceptance by businesses and institutions when their assets can fluctuate by as much as 50% in a single day. Regulation may help to take some of the unpredictable volatility out of the market along with stable coins
We are starting to see the beginnings of widespread global adoption. Many financial institutions and companies are developing their own propriety blockchains. Even governments are looking at the idea of digital currencies and payment systems. Security tokens have recently been gaining in popularity and will likely continue to do so. Security tokens are a natural progression between the traditional finance sector and blockchain. Security tokens are asset-backed and comply with regulatory governance making them a lot more attractive to many investors.
Over all the cryptocurrency space needs to find a balance between regulation that will protect everyone involved and the whole concept of freedom and independence from the traditional markets that spawned the birth of cryptocurrencies in the first place with Satoshi Nakamoto’s manifesto.
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