Cryptocurrency has undoubtedly become a phenomenon that very few could have ever imagined. Over the last decade, it has become a vital part of the financial industry and has changed the way compliance looks at things.
Crypto is well known for the fluctuating rates it produces, with prices either dropping or rising every day, the set value of your coin is ever-changing. This can be a difficult thing to ensure that compliance is met, so what are we doing to regular it?
Popularity of crypto
The challenges within the crypto market have all come from one thing: The popularity of crypto. In 2021, it was reported that only 16% of Americans had invested in cryptocurrency.
Fast-forward 1 year and another article cited that 78% of adults had heard about the frenzy and much more investing money into it.
The general attitude around cryptocurrency has changed also, with the general percentage of people thinking it’s a ‘’gamble’’ going from 48% down to 37%. Portraying that the currency has been marketed in a positive light to many of these individuals.
Many people that invest in cryptocurrency are now seeing it as a viable way to invest in their future.
Regulating
Financial regulations within the crypto market have always been controversial, but, if your coin is legit then keeping up to date with regulations can actually be a good thing.
Having regulation within the market means that there is a sense of stability, and this is crucial, especially when dealing with this market and all it has to offer.
2022 has been a busy year for all things crypto and trying to regulate it has been at the forefront of all controversy. Bitcoin, as we all know is probably the biggest form of cryptocurrency out there, so it comes as no surprise that this has been made an example of.
Compliance officials are looking to develop a new regulatory framework that will investigate everything that goes on in the crypto world, such as central bank digital currencies, non-fungible tokens (NFTs), and stable coins.
Having this in place will offer firms the chance to properly understand the market and know what needs regulating when it comes to their market.
Why this is beneficial for the market
Regulating the market has a lot of benefits, especially if you’re coin is secure. By having a regulated market your investors are protected and have more confidence.
As of this moment in time, there is little to no protection within the market for anyone that is investing in cryptocurrency.
With that, there is no regulatory framework to go along with it. High rollers such as YouTuber, Jake Paul, have felt the disastrous effects of this as they have put all their money into crypto and lost the majority of it.
Some exchanges do still require that you maintain some sort of compliance along with the federal government rules in the US, but they’re not heavily regulated like what they should be, meaning that they have no chance to earn anything back if they get scammed, get their coin stolen or lose everything on a crash.
Another benefit that can be highlighted by having a regulated crypto market is making the ecosystem itself safer. Due to the lack of regulation in the market, there are companies/individuals that are setting up currency that has no solidified way of being profitable.
A lot of these coins are produced in the hopes that people will buy into them and then the creator will scam them out of their money.
This is the sad truth that many faces in an unregulated market, by having regulation in place, we can check that people making these coins have a genuine interest in making the market a better, safer place for everyone to enjoy and make money from.