There has been a constant turbulence over the last few months for the investors in cryptocurrencies and the impact of crypto regulations has been one of the most widely talked about topics over this period.
With the latest blow where Barclays bank has intervened to stop UK investors using their credit or debit cards to deposit funds into the world’s largest cryptocurrency exchange to Elon Musk’s hot and cold relationship with Bitcoin institutions getting involved in the crypto-space has the potential to cause massive fluctuations in its value.
China has gone one step further, banning cryptocurrency mining as well as clamping down on trading as it seeks to pave the way for its own central bank backed Chinese digital currency. China jolted trading prices of almost all popular cryptocurrencies like Bitcoin, Ethereum etc. Concerns were raised on whether the Chinese crackdown will have a long term negative impact on these coins. However, as of today, the prices of popular coins appear not to be falling by much, rather going up. But this apparent stability can’t be thought of as guaranteed. Because, when it comes to cryptocurrency prices, uncertainties and massive dips have become the norms, and the impact of crypto regulations cannot be understated.
Citizens being their own bank
The lure of a cryptocurrency is that it can make transactions between two individuals secure and possible without inefficient intermediaries like banks and rule-makers like governments. It offers complete anonymity and freedom In fact, governments dislike even their own currency notes, as it provides anonymity and too much freedom. And it’s not just authoritarian government’s that are trying to regulate this space in their own image. In the US, Europe and the UK, there have been significant moves by both governmental and financial institutions to have control and power over the way that people spend money, and it’s possibly fair to say that part of this is because central bankers don’t really want individual citizen’s being their own bank.
For instance, in context to Barclays bank, UK’s Financial Conduct Authority’s (FCA) ruling that Binance is not permitted to conduct any regulated activities within the UK, as the Cayman Islands headquartered company has not registered with them.
The FCA went further on its website stating: “Be wary of adverts online and on social media promising high returns on investments in cryptoasset or cryptoasset-related products. Most firms advertising and selling investments in cryptoassets are not authorised by the FCA.”
Cryptocurrencies are a type of extreme financial and emotional democracy. Even so, one could argue that it is doomed in its present form. Its technology platforms, like blockchain, will become standard as governments themselves adopt them, but the cryptocurrency as we know it today will stand no chance against the dominance of CBDC’s (Central Bank Digital Currencies).
Will the impact of crypto regulations negatively affect the market?
The technological foundations of cryptocurrencies make it hard to for larger forces to be policed entirely, but the field could well end up returning to the preserve of a few technologically minded enthusiasts. This prediction may be too gloomy. The true outcome remains to be seen.
This is undoubtedly a pivotal moment in the story of cryptocurrencies which will determine their place for decades to come, and the impact of crypto regulations is going to be one of the hottest topics for some time to come.