The cryptocurrency world has grown exponentially over the past decade. Millions of tech enthusiasts and investors around the globe have become fascinated with it. Governments, as well as regulatory agencies, have taken notice of this unprecedented growth. The risks and unexpected challenges associated with digital currency are becoming increasingly significant to them.
In their quest to regulate bitcoin and crypto and ensure its safety and legitimacy, regulators around the world are exploring different ways to regulate crypto, including special crypto permits. In this write-up, we take a look at some of the key policy changes shaping the future of cryptocurrency, highlighting some of the most recent and most interesting global regulatory developments.
Crypto in crosshair
Several bitcoin exchange rate gains this year were lost on February 9 due to reports of an increase in regulatory crackdowns throughout the cryptocurrency industry. As a result of Kraken’s crypto-staking product offerings, the SEC announced charges against the firm for selling unregistered securities. Additionally, the New York Department of Financial Services announced that it was looking into Paxos, the company behind Pax Dollar and BUSD Binance stablecoin, for possible corruption.
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Even though Operation Choke Point isn’t directly connected to Bitcoin itself, there are increased concerns the crypto industry may be throttled by it. Federal regulators launched Operation Choke Point in order to restrict banking access for certain “high-risk” but (mostly) legal industries via the Federal Deposit Insurance Corporation (FDIC). There has been no doubt that fraud and criminal activity have intertwined throughout the crypto industry.
Still, some are concerned that if regulators create burdensome hurdles that have wide-ranging limitations, the heavy hand of the state will hurt honest actors. The process of staking crypto is still gaining popularity, so some crypto enthusiasts may now choose to do so on an offshore and sketchy exchange, putting their assets at even greater risk.
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Regulations regarding cryptocurrency are slowly being updated by the government so that they can keep up with the fast-growing industry that cryptocurrency is. Biden included several provisions regarding digital currencies in his recent budget proposal for 2023. Some of these provisions could generate $11 billion in government revenue.
Effect of new rules and regulations
The development of non-fungible tokens (NFTs) and the popularity of decentralized finance (DeFi) have presented new challenges to regulators around the world in this regard. In some countries, activities related to cryptocurrencies have been welcomed, and legal frameworks have been established to regulate their use. However, in other countries, cryptocurrencies have been viewed as a threat, leading to outright bans or strong stipulations on how they may be used. A balance will need to be struck between protecting the public interest and fostering innovation within the cryptocurrency space as the industry evolves, as regulators will need to make sure that regulation is sensitive to safeguarding the public interest.
Enhanced regulations could limit the potential for cryptocurrency profits in the future, in addition to bringing greater clarity to the future of the cryptocurrency economy as a whole. Investing in cryptocurrencies requires that you stay informed about new regulations that will help you make the right decisions regarding your investments and taxes.