With the rise of the cryptocurrencies market across the globe, some states are considering its regulation. Perhaps it seeks to give protection to subscribers like regular consumers of products and services. Some countries are believed to be pushing for more measures that would regulate crypto transactions within their respective territorial jurisdictions. Learn more about the clashing arguments involving crypto regulation.
Whether to impose special regulations
As of the moment, many are speculating that the United States is looking to impose new regulations in crypto trading with the appointment of a new secretary for the Securities and Exchange Commission. Perhaps it would come after settling the legal question of whether Ripple would fall under the class of financial securities. The resolution of this case would be instrumental to be able to clear the air.
Regulation is not that bad after all. Take, for example, the case of cryptocurrency subscriptions in Japan. The digital asset is not treated as cash nor currency but instead as legal property. Ownership of virtual currency then becomes a source of rights and obligations. The reason behind this initiative is the vulnerability of crypto exchanges to attacks such as the one which transpired against Coincheck.
If the intention is noble, regulations deserve the benefit of the doubt. Now, Japan is collaborating with other countries to be able to improve regulations on cryptocurrencies. This is inevitable considering the global scope of crypto trading.
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Whether crypto prices will go down as a consequence thereof
There is always the risk that prices might go down as a result of more regulations. Some may think of regulation as a handcuff to the works of the invisible hand directing the flow of a free market. Be that as it may, it might also turn out to be a breeze to ease transactions involving crypto trading.
Since there is no substantial study yet to deduce the inverse correlation between regulation and crypto prices, it might be premature to assume that regulations would drag down prices. Perhaps investors would be open-minded in embracing changes in the trade. They might even be delighted by measures imposed to protect their interest as stakeholders.
So as not to cause a panic, it would be helpful to arrange public consultative meetings with crypto account holders. This would give them an opportunity to raise their issues and concerns. At the same time, it could also encourage others to jump on the bandwagon.
Whether relocation to other countries would be a trend
There are floating concerns that more regulations would lead to the exodus of crypto exchange companies. They might relocate to regions with lax regulations when it comes to trading digital currencies. However, this has not yet been proved as a general trend.
In the end, the behaviour of the market shall dictate whether to trust trading platforms based on regulated countries over the non-regulated ones. There is a good chance that the market would favour regulation to better protect its interest. It is highly likely that people would prefer to be secured with legal remedies should there be trouble.
Whether it would restrict competition in the crypto market
While it would restrict competition in the sense that those companies that were not able to comply with the minimum requirements shall not be permitted to operate, it would encourage legitimate entities to thrive. It would give investors a sense of security knowing that they are doing business with a reputable crypto exchange.
In turn, this would elevate the standards of crypto trading. When the state implements reasonable measures, it poses a challenge for the market players to be a better version of themselves. The regulatory measure would give these platforms validation as to legitimacy. More than anything else, it would ensure that the playing field would be even for those interested to penetrate the market.
Global Insights have more in store for those interested in learning the recent trend on regulating the crypto market.
There is no harm in welcoming changes. After all, change is meant to explore rooms for improvement. Who knows, it might trigger a much-anticipated development in the crypto market.