Will Regulations Benefit The Cryptocurrency Market in The Long-Run

The crypto market exhibits a wide spectrum of opportunities for everyone including the investors and the regulators. Crypto market is an ecosystem in itself pertaining to centralized and decentralized financial systems. Decentralized Finance (DeFi) allows market participants to work freely without any hindrance from single-control authorities. Whereas centralized finance is a circle where there is a single entity keeping an eye over everything. 

The crypto market is no less than an ocean with millions of opportunities connecting various ends such Cryptocoins, NFT, altcoins, metaverse, and even Web3. But the question is what will happen if this ocean goes unseen, unregulated, untouched? Possibilities are, it will give rise to various illicit activities. 

DeFi & The Challenges! Implementing Regulations

Crypto market is probably similar. When taking DeFi into the picture, the transactions are not regulated by any single entity. This creates a small but a harmful gap in the industry for the bad actors to slip in. However, like it’s wisely said, every coin has two sides. Centralized finance is the other side of the coin which offers a centralized space for the users. This helps the market entrants to understand the market flow and how transactions take place. 

Most of the early adopters in the crypto currency market feel that Bitcoin and other cryptocurrencies will turn the tables around. The Crypto currency market will shift the financial control from bank to the masses. The user will have subtle control over the market and the financial transactions.  

Amid a meteoric hike in the Crypto market back in 2017, watch dogs forecasted that Bitcoin will reach pinnacle, however things are getting totally opposite. The Bitcoin drastically crashed during the CryptoWinters and fell down to $20,000 in late August, 2022. 

Now the question is: is there a need for regulations in the crypto industry? If yes, what regulations can be passed across? 

According to recent studies 46 Million US citizens own a share of Bitcoin. Market experts and analysts have seemingly forecasted that the global blockchain market will reach 39.17 Billion USD by 2025. One of our closest research firms revealed that approximately 16% of the Americans have invested, traded, or used cryptocurrency. 

Here’s Why we Need Crypto Regulations

There are certain reasons why we think the crypto market must suffice with serious regulations. Here are five reasons why. 

1. Prevent Market Manipulation and Protecting Investors: Imagine a news going viral about tokenX which will rise by 6% in the next 24 hours? There are possibilities that investors may start investing in tokenX rigorously. Now the next day the token gets dumped in the market, creating a Pump and Dump situation. Scenarios like these will create a gap between the users and regulators. 
2. Allowing Selected Cryptocurrencies: Even when Bitcoin and Ethereum are on a downfall the crypto market is welcoming cryptocurrencies every now and then. The crypto market is expanding every day with a huge number of 20,833 crypto currencies on 2nd, Sept, 2022. With such a number it gets difficult to administer every currency. And undoubtedly, the crypto market has seen various cases of ‘pump and dump’, or digital assets going to zero in hours. These cases not only create a window for cybercriminals but also create associated complexities.
3. Advancing Technology Concerns: The crypto currency is completely backed by the tech industry, from creation to distribution. The technology is advancing everyday introducing new aspects to the crypto industry. Whether it’s the mining machines or the security bots. But, with enhancing tech, comes a gap for the bad actors to create a disruption and nuisance in the market. 
4. Online Fraud and Cyber Security Risks: If you’re a crypto geek or planning to step-in you may know about the Mt GOX case. Mt Gox was the world’s largest crypto exchange in 2010, handling approximately 70% of all the Bitcoin transactions in the world. But hackers got through the security patches and cleared Bitcoin worth 8.5 Million USD. This was only the beginning, amid the hack a lot of instances have taken place in the last decade. One such case happened in North Korea, where Group of hackers cleared cryptocurrency worth 2.5 Billion USD. 
5. Money Laundering: This stands to be one of the most known cyber crime activities in funding criminal activities. There have been several cases in the past where the hackers have littered cryptocurrencies and converted them through virtual currency mixers. The process can be termed as the most poisonous for the crypto industry. 

Crypto currency market is filled with such activities which need to be stopped. The only way to do this is to regulate the complete industry. Many government authorities have started to regulate crypto activities and crypto based transactions and serve the user’s safety. This has always been a crucial topic and surely it must be implemented to make crypto a better place for investors.

Nancy J. Allen

Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.