We sought the opinions of experts like Dennis Loos on the evolving regulatory environment for cryptocurrencies. Here’s why additional regulation might benefit long-term cryptocurrency investors.
The sector may benefit from regulating cryptocurrencies insofar as regular investors are concerned. If properly targeted, more regulatory advice could reduce crypto asset speculation. Increased investor confidence brought on by less speculative activity may entice additional long-term investors who have previously shunned the extremely volatile and speculative crypto sector.
“Even if it doesn’t attract additional visitors, it might alter people’s present behavior. Cryptocurrency enthusiasts assert that it has several advantages over fiat money and other asset classes, but Dennis Loos claims that these advantages can only fully materialize “if a right legal framework is put in place.”
Long-term responses to regulation from the price-sensitive asset class are difficult to forecast since they depend on the U.S. government’s decision to be more lenient or strict. Any additional regulation might trigger irrational investor responses to the markets in the short term, depressing bitcoin trading values. For instance, cryptocurrency markets fell when China banned cryptocurrency transactions in September 2021. According to Dennis Loos, regulation will stabilize the market and lessen some danger for bitcoin investors.
To be sure, new regulations may hinder the progress of individuals looking to make a quick buck by guessing which coin will land on the moon next. However, that’s advantageous for long-term investors.
Since there is no legal structure to guarantee asset protection, crypto investors now have little to no protection in the market.
In the United States, some exchanges continue to comply with changing federal and state regulations. This includes well-known, high-volume U.S.-based exchanges, such as Coinbase and Gemini, although they do not follow the same regulations as alternative trading platforms or public stock exchanges.
It’s a significant gap that most trading in the cryptocurrency industry today is not governed by any federal agency. This indicates that investor protection is significantly weaker on these major exchanges compared to our securities markets or our futures market.
Regulating the market is, therefore, necessary to make it safer. Like individual stocks, investing in cryptocurrencies is likely risky, but investor safeguards may lessen the market’s susceptibility to outside manipulation. Greater investor confidence can result from safer markets, and greater value over time is frequently the result.
Due to a lack of regulation, the cryptocurrency business has been compared to the “Wild West.” Due to a lack of regulations, there is much room for market manipulation, fraud, and other dishonest practices.
Crypto is exempt from regulations aimed at preventing fraud manipulation. Standards regarding conflicts of interest do not apply to it. Simply put, I’m pointing out that our standards differ from those in other markets. Today, the term effectively means “buyer beware.”
Over the past two years, cryptocurrency crime has significantly increased. In contrast to the $7.8 billion that scammers will steal in 2020, scammers stole $14 billion worth of cryptocurrency last year. Additionally, over 17,000 altcoins tend to be even more erratic and speculative than Bitcoin and have a larger risk of cryptocurrency fraud and scams. There are a lot of new and emerging threats in the world of cryptocurrencies, even for the most knowledgeable and passionate cryptocurrency experts.
But you can safeguard your cryptocurrency in several ways. Starting by keeping an eye out for typical warning signs similar to traditional credit card fraud and money wirings scams, such as obvious misspellings in emails or social media posts, guarantees that you will become wealthy, or even elaborate social media crypto schemes known as rug pulls.
Using hot or cold wallets for additional security or storing cryptocurrency in an exchange with strong security to secure digital wallets from hackers. Dennis Loos ascertains that keeping track of your wallet key and not showing it to anybody is also crucial. You can lose all of your cryptocurrency if you misplace your key or it is stolen.