Is cryptocurrency due for some regulation? The crypto market has exploded over recent years and is becoming a popular part of the newer generations’ lexicon. Some think it is a sure investment and a strong hedge against inflation of the US dollar, while others believe it’s a Ponzi scheme and money is better spent elsewhere.
Early investors of cryptocurrencies like Bitcoin and Ethereum flocked to the market because it was unregulated. They took a more Libertarian approach to a currency that involved very little government involvement. But now that cryptocurrency has become so popular, several government agencies are looking into changing the rules.
Dangers of no regulation
Federal regulators are concerned because cryptocurrencies swing up very high and then come crashing back down. Their volatile nature causes people to either get rich quickly and cash out or lose a lot of money if they buy at the wrong time. The entire market recently just fell 40% after a major sell-off in China. Government agencies also have issues with the security of people’s money and identity in the crypto market because they are susceptible to money laundering and identity theft.
What could regulation look like?
So what would more crypto regulation look like? The Internal Revenue Service (IRS) wants to ensure that everyone buying crypto is getting taxed appropriately. Meanwhile, many tech start-ups are creating apps to buy and sell crypto. If there are massive swings, it directly affects their customer base. The U.S. Securities and Exchange Commission (SEC) wants to ensure all money and personal information are protected when buying and selling. It could get messy.
Possible effects of regulation
How will this affect Bitcoin, Ethereum and other popular forms of crypto in the future? Could it scare away the early investors who were searching for unregulated currency? Will it make it harder to turn a profit if you have to pay more taxes? Will it draw in more investors since regulation could make buying crypto safer? What do you think? Let us know in the comments below!