CRYPTOCURRENCY
The Impact Of Regulation On Cryptocurrency Markets
Influence of regulation on cryptocurrency markets
The growth of the Crypto Currency was a fast and unprecedented phenomenon in the past decade, and prices have been wiped out between the highlights and downs. While some investors earned a wealth by buying and selling a crypto currency in these extremes, others suffered significant losses. The rapid growth and volatility of the market have caused an intense discussion on its potential impact on traditional financial markets.
What is regulation?
The Regulation applies to the rules and guidelines that government establish to manage the activities of companies and individuals within their jurisdiction. In the context of the cryptocurrency, regulation refers to the laws and regulations imposed by governments around the world aimed at protecting investors, preventing fraud fraud and maintenance of public confidence on the market.
The rise of regulations
In recent years, regulatory efforts have increased globally, and many countries have introduced new rules and guidelines for the exchange of cryptocurrencies, wallets and other related services. The Financial Action Working Group (FATF), a global inter-government organization, also issued guidelines on the regulations against money laundering (AML) and Know-Youur-Customer (KYC) for the cryptocurrency industry.
Key Regulations
- Washing money (AML) : Many countries have implemented AML laws to prevent terrorism financing and other illegal activities in the cryptocurrency market.
- KNOW-YOUR-CUSTUMER (KYC) : KYC Regulations require exchange, intermediaries and other service providers to check their customers’ identity before allowing them to participate in the market.
- Taxation
: Governments have started to tax crypto currency, and some countries impose a tax on profit from purchasing or selling digital currencies.
- Securities Stock Exchange : Regulations for measuring securities have increased, and many stock exchanges are now demanding that traders be registered as brokers or traders.
Impact on cryptocurrency markets
The implementation of these regulations had a significant impact on cryptocurrency markets:
- Increased volatility : strict requirements AML and KYC have led to increased volatility in the market, as regulators seek to prevent illegal activities.
- Regulatory risk : companies operating in the cryptocurrency space are facing regulatory risk if they are not respected with new rules or regulations.
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- Market structure
: The increase in regulations has led to a shift to multiple centralization on the market, as larger exchange and brokers have become more dominant.
Outs of Regulation
- Cinema Prohibition ICO (2017) : China banned the initial offers of coins (ICO) due to concern due to regulatory risks.
- Security Paper Law in the United States : The US Securities Law requires that companies be registered with the Securities Commission (SEC) before issuing securities, including the CRIPTO currency.
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Conclusion
The regulations have become a major obstacle to the Crypto Currency markets, which affects volatility, compliance costs and market structure. Although regulations aim to protect investors and maintain public confidence, their impact on the market was significant. As regulations continue to develop, companies and investors must adapt and develop strategies to move in these changes.
