Why is it worth looking forward to the regulation of cryptocurrency?

Cryptocurrency remains an unregulated market today, with no rules to clarify what is and is not allowed, and no laws in place to punish scammers.

While there are some notable regulatory exceptions, such as the U.S. SEC’s “Crypto Regulatory Guidelines” and the Maltese government’s “Blockchain Island” strategy, these systems are not binding and cryptocurrency remains a game for anyone to play, just like the gold rush of the past.

With the recent discussion about Facebook's coin issuance, even though many people are dissatisfied with the "cryptocurrency regulation", regulation is an established fact. In fact, there is no need to resist regulation blindly. In some aspects, regulation can bring many positive effects.

Fraud Prevention

It is undeniable that some originally illegal behaviors become completely reasonable when used in cryptocurrencies and are not subject to legal constraints. For example, the foreign fund Bitconnect, its operating model is a Ponzi scheme of passing the parcel, and its founder has successfully escaped punishment.

Laws and regulations will help reduce the number of existing scams because the threat of prosecution makes it harder to execute these schemes. This, in turn, makes investing and trading in cryptocurrencies easier and safer.

Limiting market manipulation

Cryptocurrency market manipulation is rampant. If you have enough money, you can organize one. All you need to do is set up a pump-and-dump scheme where your team buys a project's token, drives up its price in the process, and then sells it once you've hit your target number.

This also means that the value of a token often has nothing to do with its actual technology or potential — it’s all about making money, which can cause truly world-changing technologies to be left behind or forgotten.

Regulation can prevent this from happening, and purchasing behavior will not only depend on confidence in the technology, but will also ensure that the overall crypto economy is safer overall.

Higher legitimacy

Regulation isn’t just about protection; it’s also about legitimacy. Although cryptocurrencies can be exchanged for fiat currencies, for now, they exist separately from the traditional financial system, which severely inhibits their potential. While you’ll occasionally find some restaurants or websites willing to accept Bitcoin payments, most won’t, not just because of the volatility, but also because cryptocurrencies are still in a gray area.

Once cryptocurrency is more strictly regulated, it can fully enter the mainstream world. Because there will be stronger protections, businesses will not be as hesitant to accept it as a bid.

Preventing financial crime

The association with criminal activity has been one of the biggest criticisms of cryptocurrencies, with Bitcoin once considered a safe way for criminals to conduct transactions, and due to its anonymity, the only thing that can be identified is the wallet address, allowing people to continue their underground and illegal activities.

Legislation and regulation can severely hamper these activities. Money laundering becomes much more difficult when governments have better ways to check wallets for suspicious activity, and it can also serve as a way to protect your wallet from theft.

More investment interest

Cryptocurrency trading volumes have soared due to Bitcoin’s astonishing surge, and while there are many new investors coming on board, mainstream adoption of cryptocurrencies remains limited, and this hesitation is understandable.

However, with regulation comes safety. No one wants to ride a poorly maintained roller coaster, but many are willing to hop on the thrill ride if they believe the company behind it has their interests at heart.

Improved stability

Some people find the overall volatility of cryptocurrencies to be the most exciting aspect. While no one is looking at it as a panacea to their income woes, the fact that it is emotionally taxing and inherently easy to manipulate makes it difficult to take it seriously as an investment.

However, regulation would go a long way towards stabilizing the cryptocurrency environment. Much of the volatility in the cryptocurrency market is due to traders being able to do what they want with very little responsibility. With regulatory measures in place, shady trading strategies will decrease, and those that still exist will become harder to pull off, creating a safer environment for traders around the world.

at last

Supervision should be supported. If cryptocurrencies continue to lack supervision, the market will become a game of manipulation, and almost no one will consider the changes, technology, and strengths brought by these projects. However, supervision is not the same as a total ban. How to grasp this degree is something that regulators should think deeply about.

Source: Blockwave