The spectacular rise and fall of cryptocurrency values in 2018, as well as the increasing popularity of various types of cryptocurrencies, has now — it appears — drawn the attention of regulators. But here’s the thing: because cryptocurrency isn’t governed centrally by any government, each one has its own strategy to overseeing Bitcoin and other cryptocurrencies.
Several areas of regulation appear to be on the verge of being implemented. These include regulating initial coin offerings and tax reporting in the same manner as securities are. The basic buying and selling of bitcoin with blockchain technology is incredibly secure as observed on various platforms such as Crypto Engine. However, humans are involved in trading, exchanges, and initial offerings and this is an indicative that fraud is also taking place.
Changing the Market
Regulators have the potential to reduce bitcoin trading values in the short run. However, in the long run, it is envisaged that well implemented regulations will stabilize and make the market a safer investment. The Securities and Exchange Commission is considering regulating ICOs as securities and is coming down hard on fraud.
Sentiments from Wharton reveal that, when regulators clean up the market of unlawful operations, they will help to keep cryptocurrency values in check, making the market safer for legitimate investors. A set of bad actors — those interested in utilizing cryptocurrency for money laundering and other illicit activities — would be scared off by regulation.
Make the Market Safer
Regulation of the Bitcoin market has the potential of making the industry safer. It will almost certainly be a hazardous investment, but with investor policies in place, the market will be less susceptible to outside manipulation. Overall, this is a positive development for bitcoin investors. Safer markets engender greater public trust, which leads to price increases over time.
For example, investors may be confident that trades on a U.S.-based exchange are more secure and safer than those on exchanges in other jurisdictions because to anti-fraud and cybersecurity procedures.
Coinbase’s valuation is an illustration of how regulation may instill trust. Coinbase’s stock price has fallen since its IPO, bringing its market capitalization drop from $85 billion to $60 billion, although investor confidence remains high. Coinbase’s valuation is an illustration of how regulation may instill trust. Coinbase’s stock price has fallen since its IPO, bringing its market capitalization drop from $85 billion to $60 billion, although investor confidence remains high.
Areas that should be Regulated
In most nations, capital gains from crypto profits are underreported, with an approximate 59 percent of individuals who make income from crypto markets in the US not reporting. Taxing authorities, such as the IRS, are clearly concerned about this. And the Internal Revenue Service (IRS) is starting to act.
The United States appears to be making progress in developing smart policies that foster trust. As with traditional securities, they’re concentrating on anti-fraud, cybersecurity, and other investor protection measures.
New York understands how having policies that support cryptocurrency trading and promote exchanges to set up shop in the state can have significant economic benefits. Cryptocurrency firms and marketplaces should address on fundamental concerns such as ethical conduct to strengthen their relationship with authorities.
How is Regulation Impacting Bitcoin’s Share Price?
Interestingly, cryptocurrency and Bitcoin legislation does not appear to be having a significant impact on the stock price. We’ve seen some price drops when a new regulation item is released, but the price usually rises again.
The most important thing to know about crypto is that it is risky. As regulatory authorities step in to provide consumer protection, this risk may diminish, but for now, it is still a highly speculative venture.
Regulators should not be concerned that their actions would result in [cryptocurrency] activity being offshored. Instead, countries should concentrate on enacting regulations that boost investor confidence in their domains.