The issue of whether or not to regulate crypto is complex. Some experts argue that the regulation of cryptocurrencies would benefit the market in the long run, as it would discourage illicit activity and add a level of investor protection.
Others disagree, arguing that regulating cryptocurrencies will only create more uncertainty, which will discourage legitimate projects. In any case, one must first consider the type of regulation that should be applied. Heavy-handed regulation will hinder legitimate projects and weed out the bad players, while sensible regulations will benefit all investors.
Regulation of crypto will protect consumers, but it will also impede institutional investors. Institutional investors must abide by strict compliance rules to avoid committing fraud. If a crypto exchange was regulated, it would be subject to criminal investigation, resulting in significant losses for investors. Regulatory oversight of cryptocurrencies will also create a transparent and fair system for users and investors. However, it may be difficult to enforce such a regulation.
The regulator must understand the differences between crypto and other products. As a technology, it is highly volatile and unpredictable. If cryptocurrency is regulated by design, it would stifle innovation, hamper innovation and freeze the market in its current state. While this might not be ideal, regulation of crypto is not likely to be detrimental. It is still a young technology, and it will be a while before it has the chance to mature.
Moreover, regulating crypto would give institutional investors confidence. Because they are involved in the exchange, they must abide by strict compliance rules or risk criminal prosecution. Similarly, regulation of a tech platform would provide clear guidelines for both investors and users. This would protect investors and users from the risks and fraud associated with investing in a new technology. So, regulating cryptocurrency would not only protect institutional investors, but also consumers.
There are many reasons to regulate crypto, but the primary concern is that it is too risky. For example, a bank must provide protection to its customers. If it is not, there is a potential for abuse. The regulation of cryptocurrency would only serve to freeze the market in its current state. Despite the risks, cryptocurrency is still a relatively young technology. Its regulations should be based on its potential, not its price.
In addition, regulation of crypto will not protect the consumer. As a technology, cryptocurrency will always be subject to change. Hence, the regulation of crypto should not be the same as the regulation of existing currencies. Moreover, regulating cryptocurrency will not protect the user. This is because crypto is a decentralized asset. Therefore, regulators will not be able to prevent the risks of its users.
The governmental officials should ask: Why should cryptocurrencies be regulated? This question can be answered with the answer to the question, “When should a government regulate a cryptocurrency? Why should it be regulated?“ It is because regulation will only serve the consumer. Furthermore, regulation will increase confidence in the crypto market, but it may also lead to criminal activities. It is important to remember that cryptocurrency is a technology, not a commodity.
The cryptocurrency market has high volatility, which is a major reason why it is hard to regulate. This means that a large fluctuation in value can affect the price of a particular cryptocurrency. In contrast, a low volatility is a sign of a stable market, which means that it is more likely to grow over time. Consequently, regulation of cryptocurrencies could have negative consequences for the public.
Moreover, regulation would only discourage the growth of cryptocurrency and create a new black market. Instead, it would discourage the growth of the cryptocurrency industry and prevent substantial benefits for law-abiding citizens. Besides, the governmental officials should question whether it is necessary to regulate cryptocurrencies at all. Only when there is a need to regulate the cryptomarket, should they try to control the bitcoin market. The idea of regulating cryptocurrencies is counter-intuitive.