Crypto Regulation. Good, or Bad?
There has been a lot of talk recently - all about crypto regulation.
This whole 'regulation' thing is a grey area -- so I thought you might find this helpful. I've created for you a condensed version of what's what when it comes to regulation.
📌 Is Crypto regulated at the moment?
Short answer: No
Slightly longer answer: There are a few countries (and states in the US) where crypto is regulated more than others - but generally - there is no real regulation.
📌 What does regulation actually mean?
It means protection - for us - the customers.
Because Crypto - and Blockchain technology - is so new - most countries have no specific laws governing the trade of cryptocurrencies and so, do not regulate exchanges.
This means customers are not protected - should anything unfortunate happen to exchanges. As we have all seen recently with FTX.
📌 Why is it not regulated?
Well - for starters - how would this look?
The technology that allows crypto to even exist is the Blockchain.
And any activity that takes place on the Blockchain can do so without third-party interference. That’s the whole point of the Blockchain!
So to have any entity 'regulating' this - takes away the entire purpose of what the Blockchain is for in the first place.
However - that said - it is generally considered that greater regulatory guidance, if well-targeted, could help reduce speculation among crypto assets, and therefore help crypto become more mainstream.
This alone could be extremely bullish for crypto - as if there was more 'protection' - then the investment would become more attractive -- particularly to institutional investors.
Cryptocurrency regulation is a controversial topic, but plenty of experts say crypto investors should welcome it.
📌 PRO'S AND CONS
For starters, more regulation could mean more stability in a notoriously volatile crypto market.
“Regulations will help stabilize the market” is the general consensus from those in favor of regulation.
New regulation also has the potential to protect long-term investors, prevent fraudulent activity within the crypto ecosystem, and provide clear guidance to allow companies to innovate in the crypto economy.
Those pro-regulation in the Senate are saying "The bottom line is that we need comprehensive regulation in place to weed out the bad actors and ensure consumers have faith in the institutions they are trusting with their hard-earned money"
Many, many cryptocurrency enthusiasts fervently oppose regulation.
They say it would hinder innovation and goes against the spirit of cryptocurrency, which emphasizes decentralization at its core.
For these anti-regulation crypto enthusiasts, the decentralized nature of digital currencies like Bitcoin that (unlike traditional currencies) are NOT backed by any institution or government authority — is a big draw.
So from this point-of-view, any new regulation would pose a threat to the decentralization which is seen as a feature, not a bug.
📌 What’s Next?
While a rise in mainstream adoption of crypto in 2021/2022 has led to a running debate on the role global governments in this largely unregulated sector -- clear rules are still in development.
However...recent conversations in Washington suggest it’s NOT a matter of if further regulation is coming, but WHEN.
📌 To Sum Up:
While new regulation has the potential to bring more stability to the crypto market, there are many that believe having ‘non-regulation’ is what makes crypto what it is.
📌 My Thoughts (from Chris)
Personally - I am for regulation. For the 2 main reasons:
1: More customer protection: As crypto has gone mainstream, stories of scams and fraud have abounded.
2: Increased adoption: Particularly from institutional investors who's involvement could easily 10x the market (or more) very quickly.