Since its inception, cryptocurrency has been developed as an alternative to traditional bank transfers. The main idea of Bitcoin was to eliminate intermediaries from the transaction process, increase the speed of transactions and reduce commissions. This concept was quickly adopted and improved by developers around the world. As a result, more complex projects with expanded capabilities emerged. The popularity of cryptocurrency and the blockchain technology on which it is based has expanded, and cryptocurrency has become an investment option, competing with traditional forms of currency. The existence of stablecoins and the ability to convert USDT-ERC20 to TRC20 opens up access to the world of DeFi. All these factors inevitably attracted the attention of financial regulators.
Regulation of cryptocurrencies has become necessary for several key reasons:
- Investor and consumer protection. The cryptocurrency market is becoming increasingly popular among investors and ordinary consumers. However, without proper regulation, there is a risk for them, as many cryptocurrency projects may turn out to be fraudulent or unsustainable. Regulation can help reduce risks and provide legal protection.
- Fighting crime. The anonymity and pseudonymity of cryptocurrencies makes them attractive for use for illegal purposes such as money laundering, terrorist financing and copyright infringement. Regulation can help curb such negative developments.
- Financial stability. The cryptocurrency market capitalization has grown significantly, and its impact on financial stability could be significant. Regulation can help prevent financial crises and market anomalies.
- Prevention of money laundering. Cryptocurrencies can be used to launder money and circumvent financial crime measures. Regulation may increase control and reduce the ability to use cryptocurrencies for these purposes.
- Maintaining national interests. States seek to ensure control over the financial system and the tax base. Regulation helps states protect their interests and comply with the law.
- Transparency and legitimacy. Regulation helps establish standards and norms, making the market more transparent and legitimate. This promotes trust among investors and society.
Based on these factors, many countries and international organizations are developing and implementing laws and regulations to regulate the cryptocurrency market.
How this will affect traders: potential for growth and regulation of trading rules.
Cryptocurrencies are significantly undervalued compared to traditional financial instruments. The total capitalization of shares of American companies, for example, is an order of magnitude higher than the combined market value of all existing cryptocurrencies. This amounts to about 12 trillion. dollars compared to 1.2 trillion. dollars respectively. However, the situation is gradually changing over time, especially as digital currencies gain recognition from nation states and are subject to adequate regulation.
The impact of such regulation could be as follows:
Increasing interest in cryptocurrencies from large investors and ordinary asset holders, which will lead to rapid growth of capitalization.
Simplifying the process of buying, selling and converting cryptocurrency. High-fee exchangers and P2P trading may no longer be necessary to quickly exchange RUNE to BNB.
Creating a sustainable environment for everyday use of cryptocurrency for online and offline payments, such as payment via QR code from a mobile device and much more.
Increased demand for cryptocurrency can lead to significant changes in prices. Current rates may seem low if market capitalization increases several times. It should be kept in mind that these prospects should be considered long-term. The process of recognizing digital assets can take many years, as it is associated with the need to reform the international financial system and the legislation of different countries.
Regulation of cryptocurrencies is an inevitable step due to the growing popularity of this financial instrument. In the future, many private crypto exchanges may lose their position, and trading will be carried out on official centralized platforms like MOEX. Rule changes for traders are expected:
- Expanded possibilities for replenishing accounts and withdrawing funds.
- Reducing fees associated with trading crypto assets, which will increase the availability of digital assets.
- Establishing clearer rules regarding tax obligations, meaning traders will always have to take taxes into account when making trades.
These rule changes will help increase transparency and security in the cryptocurrency market and improve its infrastructure for traders and investors.
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