In this article we’ll cover all you need to know about the crypto regulation pros and cons. The regulation of crypto has been an ongoing discussion for years. Many investors are pro-regulation, and many believe it will negatively affect cryptocurrency. Many experts believe that regulation can kill the market, while others think it’s good. Let’s put things into perspective and discuss the pros and cons of crypto regulation.
Pros of Crypto Regulation
No More Scams – Many people, of course, are making millions through the crypto space, but one thing that is unheard of is scams. Since crypto is unregulated, scammers have an open the door to the market where they launch various scam coins.
They place these coins into the market, and once investors start to invest, the owners disappear with all the money. This leaves investors with worthless tokens and a loss of money.
Now you may be wondering how regulation can resolve this issue. Crypto regulation will ensure that every coin entering the market meets specific criteria; therefore, scammers will not be able to create fake coins. In addition, regulation will give investors a sense of safety that their money is in a secure place.
The attraction of Institutional Money – The lack of regulation in the crypto market makes it common for money to disappear without getting it back. If the market were regulated with clear rules and operational structures, investors would likely invest way more money than they do now. The market would become more effective for dealers as liquidity levels rose. Significant pricing differences between exchanges that exist today would no longer exist.
Moral Legitimacy for the Crypto Market – From the beginning, Bitcoin was known to be a coin for criminals. A coin to buy drugs and various other crimes that were unheard of. This changed in 2017 when the price of bitcoin experienced a significant spike. However, this “coin for criminals” mindset still exists, which is why many countries are strict with their crypto regulations.
A pro that can come about with crypto regulation as a digital asset is a regulatory framework that will guide the market. This will give many countries a reason to encourage cryptocurrencies instead of banning them.
Cons of Crypto Regulation
It presents the risk of capital flight from crypto – The crypto industry has gained popularity because individuals want to take control of their lives and move away from centralized government structures with parties involved. Therefore, adding rules from the government would be like introducing the very authority that crypto enthusiasts don’t want watching over their money. The outcome would be a move toward more reliable traditional assets. There would be no value in investing in a risky asset with an unclear ideological goal.
By now, it’s pretty evident that the pros of crypto regulation outweigh the cons. Crypto regulation will lead to many advantages on the investor’s part. People will not be afraid to leave their money in exchanges. Scams are much less likely to occur, leading to fewer losses. There are not many problems with cryptocurrency regulation. This is because crypto investors today aren’t very engaged with the concept of cryptos and their power to the people. Regulation is, to them, a sort of capital protection because all they want to do is invest and increase their money.
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