From Banning to Regulating Crypto: The Broader Impact
Addressing the Broader Impact of Banning and Regulating Crypto
Byline: Hannah Parker
Crypto isn’t new to criticism and regulations, some countries have banned cryptocurrencies such as Bitcoin, Ethereum, and others due to their vitality and decentralized nature.
Resorting to regulatory measures rather than a ban may have obvious benefits, such as more stability in the market, an increase in investor protection and confidence by keeping track of investors’ identities, and preventing fraudulent activity within the crypto ecosystem. Although some politicians and lawmakers in other countries have voiced out that the ban on crypto will not work but instead have regulation measures in place. Britain’s Prime Minister Liz Truss noted: “We should welcome cryptocurrencies in a way that doesn’t constrain their potential.”
And US congressman Brad Sherman, well known for being the biggest skeptic when it comes to crypto also said “We didn’t ban it at the beginning because we didn’t realize it was important and we didn’t ban it now because there’s too much money behind it.” In some countries, the government doesn’t accept crypto as a formal payment method, even though it has no laws or regulations that govern crypto it legally allows its citizens to own tokens and trade them.
The Broader Impact of Banning Crypto
For some countries, while banning cryptocurrency may seem like a good idea or in some way solve their financial problem it is a short-sighted solution to a long-term issue as it will be moving the market into a bleak future like the black market. Banning crypto will not make the market go away but will open doors to money laundering and financing of tourists. A complete ban can bring fear to investors and force them to liquidate their assets or take part in the shadow economy. If a large number of investors dispose of their assets it can lead to a spike in supply and a reduction in price. According to this Bitcoin 360 review, “Crypto Bans Will Not Stop Wider Adoption.” As such it now has more investors and more money behind it. It is preferably wise to have legal and policy infrastructure established rather than prohibiting the use of crypto or banning it completely.
Addressing Concerns Through Regulatory Measures:
Compared to banning crypto, regulatory schemes can provide a long-term and rule-based approach to address concerns around cryptocurrencies. More regulations could mean more stability in the crypto market, and financial stability while allowing innovation and attracting more investors to the crypto sector. Investors will also have protection in the market and protection for their assets as we know how volatile it is. Apart from these positive outcomes that can come from regulating cryptocurrencies, there are some major problems such as Bitcoin as it exists at many different locations at the same time making it difficult for a single regulatory power to control or enforce its will. Regulating cryptocurrencies can be a healthy development for the industry but over-regulation can also be an issue as it will prevent investors from getting involved with cryptocurrencies. There might be a number of ways to regulate cryptocurrencies but they still have to find a suitable way that will benefit both parties and does not take away the whole aim of crypto from the start. Even though new regulations will be put in place, it’s still a highly volatile and speculative investment.
While it may seem plausible to ban cryptocurrencies, it is not. Overall, given that blockchain helps in streamlining many other processes and allowing free trade across borders, great regulations or strict policies will strengthen cryptocurrencies.
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