There have been many attempts to regulate the cryptocurrency market but some countries like China and South Korea are still trying to keep it under control. The U.S., on the other hand, is slowly loosening its restrictions by streamlining their currency regulations with a plan for ICOs in June 2018. Experts believe that regulation will become even more important as crypto goes mainstream and becomes an alternative payment method or currency outright
The “crypto regulations 2021” is a topic that has been on the minds of many people in recent weeks. The government will have to create a pathway for crypto market growth through better regulation.
Crypto remains an enticing port in the present financial storm as supply-chain troubles persist and the US currency fights inflation fears. The clearance of the first Bitcoin (BTC) futures-linked exchange-traded fund (ETF) to trade on the NYSE and Nasdaq by asset managers ProShares and Valkyrie Funds, respectively, has ushered in a whole new type of financial instrument, sparking market enthusiasm. The US Securities and Exchange Commission (SEC) gave Valkyrie express permission, whereas the ProShares ETF was simply not objected.
This brings the year’s interest in crypto by institutional investors to a close. There was Coinbase’s $64 billion NASDAQ direct listing, and big pre-IPO venture capitalists (VCs) like Andreessen Horowitz (a16z) have formed their own billion-dollar crypto funds.
The financial enthusiasm isn’t limited to the top names in the business. Crypto-related firms reportedly raised more than $2.6 billion in the first quarter of 2021, which is more than they did in the whole year of 2020.
To actually be a legitimate investment vehicle that stands up to competition, rather than merely a fleeting craze that is the twenty-first century’s version of a gold rush or tulip mania, crypto must gain institutional finance’s long-term backing as a serious investment option.
It’s much easier said than done. So, how does crypto accomplish this?
Why are we doing this now? The US Securities and Exchange Commission took eight years to approve a Bitcoin ETF.
Come down from your bluffs and unlock the gate.
Crypto has already shown that it can provide triple-digit percentage returns, but these big price fluctuations only serve to strengthen its image as the “Wild West” of finance. Only until virtually universal trust in both its stability and transparency has been achieved will crypto become a fully mature investment option.
Many players in the emerging crypto economy, as well as watchdogs, have voiced caution. SEC Chair Gary Gensler, one of the country’s most powerful watchdogs, expressed worries about investor safety in the $2.5 trillion crypto sector. Last month, Gensler stated at Yahoo Finance’s All Markets Summit:
“Whether they go into the stock or bond markets that we’ve regulated for so long, investors aren’t safeguarded the way they should be.” Without it, I believe it is a bit of the Wild West, as I’ve remarked to others.”
The market’s speculative character, coupled with a lack of oversight, produces the image of a risky atmosphere. That feeling of risk and excitement is almost acceptable for a particular sort of investor — “mooning” one day and buying the drop the next — but it’s hardly a formula for recruiting huge institutional financiers, much alone those who handle pension plans or 401(k)s.
The main crypto businesses are well aware of this, and are already working to establish standards that will make crypto more appealing to everyone from large financial institutions to tiny retail investors. The a16z established ideas for industry regulation in a report to the US Senate Banking Committee, which included:
Anyone reading a16z’s report should be aware that it was not just being given to a government body, but it also included suggestions that would be hard to execute without government support. Libertarians and crypto-anarchists may chuckle, but collaboration between governments, large financial institutions, significant crypto institutions, and the average crypto investor is critical for crypto to attain its full investing potential.
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I’m sorry, sir, but we need some legislation.
Even if cryptocurrencies and investment vehicles are nominally “decentralized,” government sign-off on (and buy-in to) cryptocurrency in the form of regulation will still be necessary to create global legitimacy and the resulting investment, even if Bitcoin was originally conceived as a way to circumvent central banks and currency manipulation.
It is in the industry’s best interests to be proactive in this area, not just in regulating itself, but also in establishing how crypto is governed by federal politicians who may not be crypto smart. Right now, the US is debating an infrastructure bill that risks cryptocurrency with ambiguous wording and wrong priorities. Companies like Coinbase and a16z have worked diligently to ensure that the law re-aligns crypto (and their own) interests, but even giant corporations can only do so much. It will require a concerted effort on the part of the whole sector to embrace this sensible policy.
Related: A new US infrastructure legislation might help protect digital assets, but there are certain issues to address first.
As awful as some of the crypto measures in the infrastructure bill are, if they become law, they may also bring certain benefits. These new crypto laws provide a strong foundation for many crypto enterprises when engaging with banks on regulations, rather than being barred or unable to create accounts. Its unique language also enables major crypto integration with the country’s top institutions, opening up whole new classes of investors and massively expanding market capitalization.
Foreign countries that are comparable to the United States may also be able to give a roadmap for sensible pro-crypto regulation. Crypto ETFs have almost completely dominated Canada’s young ETF business thanks to Canada’s fast and clear but also welcoming laws.
The first step towards tackling an issue, as the old adage goes, is to recognize that it exists. The crypto sector as a whole must acknowledge the long-term consequences of the present absence of regulation and engage with lawmakers and regulators to safeguard consumers without diminishing the very strong value propositions that drew investors to crypto in the first place.
The author’s views, ideas, and opinions are entirely his or her own, and do not necessarily reflect or represent those of Cointelegraph.
Oddup, a worldwide startup rating platform, is co-founded and led by James Giancotti. He started his career as a consultant at Deloitte before going on to Goldman Sachs and J.P. Morgan, where he worked in investment banking and research. He became an investor and entrepreneur after a decade of counseling high-growth firms. He presently serves as the CEO of Oddup and Alluva, the world’s biggest crypto asset analyst marketplace.
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The “u.s. cryptocurrency regulation” is an article that discusses the need for better regulation in the U.S. market to grow the crypto market and create a pathway for its growth.
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