Effects of the regulation on the cryptocurrency markets
The growth of cryptocurrencies was a meteoric rise, and prices have increased to new heights in recent years. The market capitalization of these digital currencies has increased exponentially from Bitcoin to Ethereum and attracted millions of investors and users worldwide. However, since the cryptocurrency gains the main attention, the regulatory authorities around the world have noticed that asked debates as to whether these markets can be properly regulated or whether they are refuge for unscrupulous activities.
The first few days: unregulated cryptocurrency markets **
Before the occurrence of regulation, cryptocurrencies such as Bitcoin and Litecoin worked in a largely unregulated environment. This lack of monitoring enabled market participants to use the volatility of the prices and often bet against each other at short -term price changes. While some saw this as a chance of winning, others were concerned about possible risks.
Increase in regulation
In recent years, governments and supervisory authorities of cryptocurrencies have been aware and recognized their increasing importance in the global financial system. The Securities and Exchange Commission (SEC) in the United States has taken measures to regulate cryptocurrency investments, while other countries such as China, Singapore and Japan have published guidelines for certain types of cryptocurrency.
Key regulations and their effects
There are several important regulations that have influenced the cryptocurrency market:
* The regulation Coincheckup : In 2020, the SEC announced a new rule according to which companies had to carry out the Due Diligence for their cryptocurrency investments. This step was regarded as efforts to prevent fraudulent activities.
* Anti-Spinal-Corr orientations (AML) : The supervisory authorities have published guidelines for identification and reporting on suspicious transactions in cryptocurrency. These guidelines are intended to prevent money laundering, terrorist financing and other illegal activities.
* Payment services regulation : Many countries have introduced regulations in the payment processing industry, which has a significant impact on the cryptocurrency markets.
The consequences of the regulation
While regulation can bring advantages such as security and transparency, it also bears potential disadvantages:
* Loss of liquidity
: Some participants in the market can fight their funds if the supervisory authorities impose stricter rules.
* Increased costs : Consideration of regulations can increase the cost of business activities in the cryptocurrency area.
Uncertainty
: The effects of market regulation are still in evolution and there are no clear guidelines that can navigate in this complex landscape.
Diploma
The future of the cryptocurrency markets remains uncertain because the regulatory authorities develop. While some can see the regulation as a necessary step to ensure security and transparency, others can consider overloading the state authority. Since the market continues to grow and becomes ripe, it will be interesting to see how the regulatory authorities reconcile the protection of protection with the potential advantages of increased participation.
Sources:
- SEC announces new regulations for cryptocurrency investments (2020)
- Anti-Sparrow leader for cryptocurrencies (2020)
- Regulations for payment services in emerging countries (2020)
