As cryptocurrency is a prominent asset for investors, some regulations are needed to be applied in order to improve this market. Cryptocurrency is becoming more well-known throughout the world. The effect and existence of crypto is seen in many areas from traditional financial markets, banks and insurance companies to the largest and most profitable multinational companies.
So this question is raised that what should have been done in order to protect investors, stabilize crypto industry as well as promoting and supporting this innovation?
Three Best Ways to Regulate Crypto
As many have suggested, the key is to regulate the crypto space. But how to approach this matter? There are no shortage of suggestions with this regard. Different countries have taken different stances when it comes to the regulation of crypto market.
However, in general, there could be 3 different ways to go about regulating digital currencies.
The first one is not to regulate at all. But, the crypto market has grown so exponentially and has gotten so big that this method does not seem to be something that regulators can rely on.
The second way is for regulators to approach this matter without any consultation from those involved in this industry. This would be a top to bottom outlook. Therefore, the lack of connection between regulators and crypto pioneers and users could potentially create many problems by ignoring the needs of those who are working with these currencies on a daily basis.
The third way, the most successful and possible way, for regulators is to have a continuous partnership with digital currency industries. Many people who are engaged in this market find this way as an interactive cooperation between themselves and the regulators. Given that there is a connection and interaction between both sides, their needs and concerns will be taken into consideration.
The Role of Bitcoin
Advent of Bitcoin dates back to the last decade, when there was a great financial crisis in 2008. From that time, Bitcoin were used by libertarians and people wanting to buy weeds completely anonymously and it had gradually changed to a mainstream in which about 46 million Americans own Bitcoin.
Now, Bitcoin market has a capitalization which goes beyond $2 trillion. So expecting this market to progress and develop without controlling and supervising it is kind of unimaginable. Apart from this matter, investors need to be sure that their assets are protected.
On the other hand, Entrepreneurs are concerned about legislating regulations. They believe that legislators who impose regulations, do not have enough practical experience and knowledge about digital currencies. Also, they had not been involved with complicated details of this market. Therefore, not only these regulations not were beneficial to this industry, but also they are unnecessarily burdensome rules for investors.
Because these regulations lack efficiency and practicality, investors prefer to invest offshore in order to escape high tax regulations. So this issue could be detrimental to home countries’ economy. Innovation always precede legislation.
It has been proven many times that crypto is in fact an unstable market. Fluctuations are inevitable in this industry and this is why millions of people has been attracted to cryptocurrencies. These fluctuations, as the name suggests, could cause a dramatic increase as well as a significant decrease in cryptocurrency markets.
During the last decade, cryptocurrency markets have been known as the most profitable and convenient ways for investors all around the world and Investing requires a reasonable understanding of the market and a perfect-timing outlook.
Cryptocurrency market is working freely and is not under control. There is no bank or organization which can interfere in this market. As a matter of fact, Crypto market is totally anonymous and cryptocurrency owners can do illegal activities like money laundering and escaping from taxes accordingly. Therefore, lack of any regulation or policy as well as no control over this market can be detrimental to countries’ economies.
To sum up, crypto market needs some regulations that must be applied to support investors and secure funds. Also, these regulations will definitely help the market to be stable and will avoid money laundering. Under these regulations no one can bypass the rules, and indirectly it can positively affect the countries’ economy accordingly.