Increased regulations can hurt cryptocurrencies, feel experts
- Crypto regulation just around the corner
- Prevent a repeat of the dot-com disaster of the 2000s
- Preventing any loss to investors
According to Jesse Powell, CEO of crypto exchange Kraken, the Ascent reports that Cryptocurrency regulations could be just around the corner. Talking to CNBC, Powell said that some form of Cryptocurrency crackdown is just around the corner. However, Powell was quick to add that any increased regulation could hurt the crypto finance business.
Tool for fraud
According to Treasury Secretary Janet Yellen, cryptocurrency is also indicted as a tool to siphon off profits by online drug traffickers. Janet was speaking at a roundtable conference on financial innovations. She alleged that there are potential faultlines in the crypto business. She also hinted at the possibility of cryptocurrency as a tool to finance terrorism.
Crypto wealth is highly speculative and volatile and is not worth storing because any value does not back it. Federal Reserve Chairman Jerome Powell and other regulators worldwide are worried about the pitfalls associated with cryptocurrencies. They, however, are quick to point out the risks of overregulation which could do more harm than the vice it tries to prevent.
Cryptocurrency regulations Why now?
Cryptocurrency came into existence in 2009 when Bitcoin was first launched. It found instant appeal as a decentralized monetary tool that did not rely on banks. Advantages that bitcoin accrued included minimal bank fees, quicker and simple transactions both locally and internationally. It also was a boon for those investors who could not obtain traditional financial services. However, the increased volatility and minimal control also became its bane. It also became a tool for the more dubious players in the business like drug peddlers and even terrorists, hence regulating regulations.
Preventing Dot-Com bubble-like disaster
Recall the dot-com bubble of the early 2000s? When the boom went bust, the Nasdaq fell almost 80% and chiseled off an estimated $5 trillion of investors’ money. The latest Bitcoin boom is also highly speculative, and authorities want to prevent a repeat of the dot-com bubble. According to Ascent, regulators are concerned about the possibilities of fraud with cryptocurrency. They want to remove all the chinks in the armor and make regulations to prevent any such eventuality.
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