Will regulation benefit the cryptocurrency market in the long run

The crypto market presents a wide range of opportunities for everyone, including investors and regulators. The crypto market is an ecosystem in itself regarding centralized and decentralized financial systems. Decentralized finance (DeFi) allows market participants to operate freely without any hindrance from single supervisory authorities. Whereas centralized finance is a circle where a single entity oversees everything.

The crypto market is nothing less than an ocean with millions of opportunities connecting various endpoints such as Cryptocoins, NFTs, altcoins, metaverse, and even Web3. But the question is what if this ocean becomes invisible, unregulated, untouched? It is possible that it may lead to various illicit activities.

DeFi and challenges! Regulations

The crypto market is likely similar. When considering DeFi, transactions are not regulated by any single entity. This creates a small but detrimental gap in the industry for bad actors to slip through. However, as it is wisely said, every coin has two sides. Centralized finance is the flip side of the coin that provides a centralized space for users. This helps market entrants understand the flow of the market and how trades are occurring.

Most early adopters of the cryptocurrency market believe that Bitcoin and other cryptocurrencies will turn the tide. The Crypto currency market will shift financial control from banking to the masses. The user will have subtle control over the market and financial transactions.

Amidst a meteoric rise in the crypto market in 2017, watchdogs predicted that Bitcoin would rise to the top, but things turn completely opposite. Bitcoin crashed drastically during CryptoWinters and fell to $20,000 at the end of August 2022.

Now the question is: is there a need for regulation in the crypto industry? If so, what regulations can be transmitted?

According to recent studies, 46 million US citizens own a bitcoin share. Market pundits and analysts have apparently predicted that the global blockchain market will reach $39.17 billion by 2025. One of our closest research firms revealed that around 16% of Americans have invested , traded or used cryptocurrency.

Here’s Why We Need Crypto Regulation

There are some reasons why we think the crypto market should settle for serious regulations. Here are five reasons.

  1. Prevent market manipulation and protect investors: Imagine a viral news about tokenX that will increase by 6% in the next 24 hours? It is possible that investors will start to invest rigorously in tokenX. Now, the next day, the token is thrown into the market, creating a pump and dump situation. Such scenarios will drive a wedge between users and regulators.
  2. Allow selected cryptocurrencies: Even when Bitcoin and Ethereum are in freefall, the crypto market welcomes cryptocurrencies from time to time. The crypto market is growing every day with a large number of 20,833 cryptocurrencies on September 2, 2022. With such a number, it becomes difficult to administer each currency. And no doubt, the crypto market has seen various instances of “pump and dump”, or digital assets going to zero within hours. These cases not only create a window for cybercriminals, but also create associated complexities.
  3. Concerns related to changing technology: Cryptocurrency is fully backed by the tech industry, from creation to distribution. Technology is advancing every day introducing new aspects to the crypto industry. Whether mining machines or security robots. But, with the improvement in technology, bad actors are creating disruption and nuisance in the market.
  4. Online fraud and cybersecurity risks: If you are a crypto geek or thinking about stepping in, you might be familiar with the Mt GOX case. Mt Gox was the largest crypto exchange in the world in 2010, processing around 70% of all bitcoin transactions globally. But the hackers broke through the security patches and erased Bitcoin worth $8.5 million. This was just the beginning, amid hacking, many cases have taken place over the past decade. One such case happened in North Korea, where a group of hackers licensed a cryptocurrency worth $2.5 billion.
  5. Money laundering: It is one of the most well-known cybercrime activities in the financing of criminal activities. There have been several instances in the past where hackers dumped cryptocurrencies and converted them through virtual currency mixers. The process can be called more toxic for the crypto industry.

The cryptocurrency market is filled with such activities that need to be stopped. The only way to do that is to regulate the entire industry. Many government authorities have started to regulate crypto activities and crypto-based transactions and ensure user safety. This has always been a hot topic and it surely needs to be implemented to make crypto a better place for investors.

Nancy J. Allen
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