Cryptocurrencies Might Lose Their Wild West Appeal Soon as New Regulation Moves in
For many people, cryptocurrencies like Bitcoin represent the Wild West of the financial world. While there are plenty of risks associated with it, there are no rules that might pull it down. It can truly grow to its fullest potential. But even if some people like what the market is, with the way the crypto market is growing, it cannot stay that way.
As the market balloons, more and more eyes will start falling on it, including the eyes of various regulation watchdogs. Gary Gensler is the country’s top market watchdog, and he promises that regulation will be cracking down on the crypto market soon. And his promise may be coming true much faster than most people expected.
Despite many of the cryptocurrencies staying largely the same, the exchanges have been taking on the brunt of regulation. The most recent example of regulation came when Binance was banned from Italy, UK, and other markets for not meeting their regulations. But that might only be the start of the regulations that the market will have to face.
More and more amateur investors are making their way to the market with dollar signs in their eyes. And despite Bitcoin rising 300% in value just over the past year, the market is still full of scams. These scams are looking to take advantage of vulnerable investors and separate them from their hard-earned cash. Furthermore, most of these scams can hide under the guise of “market volatility.”
Market volatility is another problem with the crypto market that can take most new investors by surprise. In March of 2021, Binance only shut down for one hour. During that hour Bitcoin and Ethereum witnessed their largest single-day price drops. This price drop cost investors millions of dollars and shaved a trillion dollars off the total market cap.
Moreover, hackers have also taken an interest in the market, further adding to the uncertainty of investors. In the past six months alone of 2021, the industry has lost over $350 million to cyber attacks. Not only have these attacks been more specific, but they have also been more dangerous.
So with all of these problems occurring in the Wild West of one of the biggest financial sectors of the world, regulation is only a matter of time. And for Gensler, he would prefer that the time be now rather than later.
Gensler recently gave a speech as the Securities and Exchange Commission’s head. He mentioned that the industry was in dire need of regulation that would help make it more transparent to its investors.
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