How the crypto market will be affected by regulation
Since the advent of cryptocurrencies, they quickly gained a reputation as a tool used by criminals to commit illegal activities such as drug trafficking, human trafficking, and terrorist financing.
Allegations that have no reason
As a result, many who may have wanted to become the first adherents of cryptocurrencies avoided them. And many others who actually tried to use or accept crypto found that their Bank accounts were closed as soon as they tried to buy cryptocurrency. Regulators around the world have been slamming the crypto industry with more and more accusations. While we have always known that the allegations about the use of crypto assets for black market purposes are exaggerated, we now have some evidence of how exaggerated they are.
In the financial services industry, there is a suspicious activity report (SAR) that financial companies must file when they suspect any suspicious financial transactions. Since 2013, more than 70,000 cryptocurrency-related SARS have been filed with FINCEN, or about 26 per day. This may seem like a lot, but if you don’t know, more than 12 million SAR were filed with FinCEN in the same period. Thus, cryptocurrency-related SAR accounts for only 0.59% of all SAR applications.
You don’t think that government officials in the early years of bitcoin wrung their hands and moaned that It was just a tool for rampant criminals. This was, as usual, part of an attempt to keep threats to the government’s currency monopoly from becoming too entrenched. As most people understand, using cash and Bank deposits to commit criminal activity is much more common and profitable than using crypts, so in fact, the government’s own product contributes to criminal behavior. Now that we know that cryptocurrencies are not so widely used by criminals, government agencies really have no reason to oppose them. But…
Will the crypto market go into the shadow due to regulation
But as interest in crypto assets began to grow significantly, and the price of Bitcoin actually began to rise, regulators around the world realized the irreversibility of this process. Now they seek to subject cryptocurrency to the same rules as any other financial asset. How will this affect the cryptocurrency market?
Many speculate that eventually there may be a bifurcation in the cryptocurrency markets, when some crypto assets will be traded on “white” exchanges that comply with all government regulations, identify their users and do not allow anonymous trading. Other coins will be traded on “grey” exchanges that adhere to the pseudonymous and quasi-anonymous nature of cryptocurrencies, as they were originally intended. But while some suggest that cryptos traded on these grey exchanges will trade at a discount compared to white exchanges, this is not necessarily the case.
One of the great features of Bitcoin and other cryptocurrencies has been the ability to transfer the store of value across borders and around the world without having to go through the banking system or other intermediaries. This allowed people to easily transfer money or pay for goods and services. But forcing crypto into licensed exchanges that report to governments and adhere to strict financial regulation will undoubtedly weaken some of the free aspects of the crypto ecosystem.
Of course, there are many people who got used to this free atmosphere and will resist attempts to bring the crypto sphere in line with government regulations.
Those who invest in crypto want to draw attention to how tough is the state of crypto regulation. If it is too strict, it risks destroying all innovations in the crypto sphere. But no one wants this to happen, and if no compromise is found, the crypto markets will simply become shady.