Everyone wants a slice of the next new thing; be it the latest revolutionary gadget, the hottest F&B establishment in town, a limited-edition handbag, and more, cryptocurrency is yet another shiny new object that everyone wants a piece of (A LOT of people, not every single person of course). Looking back quite a number of years, hardly anyone knew much about crypto trading or cryptocurrencies in general. However, the world of crypto has grown exponentially as of late as more people are not only getting exposed to it, but have jumped straight into it. According to cryptocurrency statistics, in 2021, there are over 300 million cryptocurrency users worldwide (around one in every 25 people), meaning around 3.9% of the population owns some form of cryptocurrency. As more businesses start accepting payments in cryptocurrencies, the numbers are expected to increase as well.
Global Cryptocurrency Market Cap from 28 April 2013 to 6 July 2022 shows the total market cap of all crypto assets, including tokens and stablecoins, at $881,568,949,306
The cryptocurrency with the largest number of users is Bitcoin (BTC) though most people might own a teeny tiny fraction of a whole coin, e.g., 0.01 BTC. The next most commonly used cryptocurrency is Ethereum (ETH), more often used to make NFT purchases, accept payments, and the likes, compared to Bitcoin, which people buy more often for their utilities or just speculating.
The graph shows the 10 largest crypto assets based on total market cap. Bitcoin is dominant as it has the largest market cap since it was the first asset
I got into the crypto scene a tad late for my liking (no point crying over spilled milk right); it has evolved beyond my imagination and branched into many aspects, like how iPhone initially only had the one and only first generation, then expanded into iPhone 4s, iPhone 7 Plus, iPhone 13 Pro Max and more. The development of crypto is likewise evolving and developing as it goes along. It is no surprise that there are late ‘boomers’ who showed interest much later, case in point: governments. The governments have their hands on pretty much everything, so why not cryptocurrency as well?
So then why do governments want to regulate cryptocurrency? Because crypto activity is decentralised — it cannot be monitored or controlled by them. Since crypto payments do not need to go through the authorities’ clearance, it might be more susceptible to tax evasion, criminal activity, and the likes. Government regulations include restrictions on mining, exchanges, and using it as a form of payment.
If you think a woman changes her mind fast, then you are horribly mistaken: things change in the blink of an eye in the crypto world. You probably have heard vaguely or substantially about the crash of TerraUSD (UST) and LUNA coin. The crash of LUNA and UST was spectacular, but not in a good way. The price of UST (a stablecoin) was supposed to maintain at the value of one US dollar, which we call ‘peg’ in crypto term. It started losing peg and fell to 35 cents as its sister token, LUNA, which was meant to stabilise UST’s price, dropped from $80 to a few cents. And all this happened this May.
The graph shows the meteoric crash of LUNA and UST
This crash reignited calls for regulations to govern the cryptocurrency market. With regulations in place, there could be more stability in crypto’s volatile market, which helps to safeguard investors. On top of that, the nature of cryptocurrency is decentralised and the networks operate autonomously, making it tedious for the government to implement any monetary policies, unlike the current financial system which is based on central banking. Bear in mind the banking system has a history of over hundreds of years, while crypto’s existence is less than 20 years. Another matter of concern is the increasing demand for cryptocurrencies leading to increased consumption of energy due to cryptocurrency mining, specifically environmental concerns and energy shortages. Back to the decentralised nature of cryptocurrency: it permits unlawful activities to bypass legal control and compliance mechanisms worldwide. I am sure there are numerous other reasons for regulations to be put in place for this fast-growing market but let us move on.
Democratic Senator Kirsten Gilibrand of New York, said this about the internet’s evolution
Besides the senator from the States, a Singapore minister also suggested that the Monetary Authority of Singapore (MAS) might consider “placing limits on retail participation” of crypto investments. Clarity among the world’s financial regulators was called for as well. One of the crypto crackdowns in Singapore is banning of crypto service providers from engaging in advertising or marketing activities in public spaces. Likewise, the European Commission, European Union (EU) lawmakers and member states reached an agreement on the markets in crypto-assets (MiCA) proposal.
According to Bruno Le Maire, French Minister for the Economy, Finance and Industrial and Digital Sovereignty
As such, regulations might be a positive aspect for this flourishing industry. Because with the right regulations, crypto crashes such as Terra-Luna and many others, could have been prevented or mitigated at the very least. Many people started to feel the attractiveness of crypto, as it is transparent (peer-to-peer of course) and private in particular. Personally, I would not want those perks to be taken away though I would not fervently oppose new regulations — so long there are disclosures, protects investors by eliminating or reducing volatility, and safeguard the crypto ecosystem, then I would be more inclined to be positive about new implementations.
So, cryptocurrency regulations: are you a yaysayer, naysayer or mehsayer?
Written by: [Coinlive] Catherine