The crypto market has been in a state of flux since the beginning of 2019. The price of most major cryptocurrencies had been trending downward until the early part of 2021 when we saw an explosion of new adopters come into the market. While this was good news and a keen indicator of the health of digital assets there is maybe some better news on the horizon for people looking to participate in the ever-growing cryptocurrency space.
Governments around the world are beginning to regulate digital assets and address problems for consumers more stringently than ever before. And while these regulations have caused many participants to worry about how the regulations will impact their holdings, there’s no denying that increased governmental oversight could ultimately prove beneficial for both crypto traders and blockchain technology as a whole.
The crypto regulations that have been passed in several countries have been a blessing for the cryptocurrency market. They have increased the trading volume and adoption of cryptocurrencies.
Crypto Regulations are a Necessity
Crypto regulations are a necessity for any financial market to be healthy, secure, and transparent. Cryptocurrency is no different from other financial markets and should be treated accordingly.
Without appropriate safeguards in place, cryptocurrencies can be used by criminals to launder money or finance terrorist activities. Therefore, it makes sense to impose some rules on this new asset class so that everyone has access to fair transactions while still protecting their interests at the same time.
Trading Volume Increases in Countries with Regulations
The trading volume of cryptocurrencies has increased in countries with regulations, according to a study by the University of Cambridge and Imperial College London. The researchers found that there was an increase in cryptocurrency adoption and trading volume in countries where regulation was implemented compared to those without. The study also found that the introduction of regulations had no effect on cryptocurrency price movements or volatility.
The US Needs Clear Crypto Regulations
The US is one of the largest markets in the world. If it were to regulate cryptocurrencies, it would increase adoption and trading volume.
The US currently doesn’t have any regulations on cryptocurrencies and exchanges, which means that there aren’t any policies or guidelines that govern how exchanges should operate. This can be seen as a disadvantage because the government cannot monitor transactions made through these platforms and ensure that they’re legitimate. However, if we look at how other countries are handling this issue, then we’ll see how beneficial regulating cryptocurrency is for countries like India and Turkey who are experiencing rapid growth in their crypto markets due mainly to much-needed and appropriate laws against illegal activities such as money laundering or fraudulence (and thus increased adoption).
Two Potential Approaches to Crypto Regulation
The crypto sphere faces two potential approaches to regulation: a laissez-faire approach, or a regulatory approach.
- The laissez-faire approach would involve minimal interference by governments and regulators in the cryptocurrency market. The philosophy behind this approach is that if people want to invest their money into cryptocurrencies, let them be free to do so without being restricted by government agencies. Proponents of laissez-faire regulation argue that it can encourage innovation and entrepreneurship in the crypto space while simultaneously protecting investors from fraudsters and scammers who prey on inexperienced users.
- A regulatory approach involves more active engagement with regulators by companies operating in the crypto space who must abide by certain rules when offering products or services to customers who are not native digital currency users (i.e., those who come from traditional financial markets). This type of regulation aims to protect customers from fraudulent businesses while also ensuring that they have access to secure information about these offerings so they can make informed decisions about whether or not they want them before entering into contracts with these organizations.
In the end, it’s important to remember that regulation is not necessarily a bad thing. Though some may see regulations as an impediment to their freedom, they exist for good reason: they protect users and investors from fraudsters and scams. In fact, the necessary crypto regulations will likely lead to even more adoption of cryptocurrencies in general as well as more stability in trading volume. They could also mean more businesses start accepting them, which would open up job opportunities for those who wish to work with these new technologies. If you’re interested in pursuing one of these jobs (or just participating in the market), consider looking into how much money you need before you start trading and participate responsibly!
Crypto Regulations Increase Adoption as Well as Trading Volume
In the US, we need a clear regulatory framework. There are two potential approaches to crypto regulation:
- A “hands-off” approach that allows innovation in the crypto space to flourish without government interference (and perhaps with some tax incentives).
- A more draconian and protectionist approach that restricts the use of cryptocurrencies while providing government oversight and control.
Conclusion (Moving Forward)
We’ve seen that regulations can increase the trading volume of a country. This means that if you want to trade crypto, it’s best to do so in a country with clear regulations. These regulations should be designed by experts on both sides of the issue (crypto enthusiasts and regulators) as to support a healthy and fair market for both the Government and its citizens.