Cryptocurrency Regulation

Crypto is a brand new industry, and like most upstart industries it has been prone to great peaks and even some valleys. So, naturally, it’s garnered a lot of attention. Some people like Mark Cuban think it’s the future, while others, like Charlie Munger, think it’s a total scam.

Sophisticated investors like these, who are thought of as knowledgeable about the economy and financial markets, and who generally do thorough research to understand the situation before deciding how to invest, stand on both sides of the argument.

The term “sophisticated investor” is a general term used to broadly define a knowledgeable, high-net-worth investor, unlike “accredited investor,” which is a legal term. By accredited investor definition, this is someone who meets precise requirements based on SEC guidelines to participate in Regulation D offerings. However, accredited investors may also have a high net worth and a substantial knowledge base with which they invest.

Like cryptocurrency, accredited investing is a relatively new field, only made possible through the JOBS Act, which was signed into law in 2012.

Regardless of your status as an investor, cryptocurrency has likely piqued your interest. Perhaps enough to invest.

One thing skeptics point out and that investors in crypto need to be aware of is the regulation surrounding it. Wherever you are in the world, countries are putting regulations in place that will impact future crypto prices.

Here’s what you need to know: 

There’s a new bill on the floor of the U.S. senate. Senator Gillibrand and Senator Cynthia Lummis proposed a new bill in June that outlines a plan to regulate crypto. The regulations would include tax requirements on digital assets and stricter requirements for stablecoins. It also categorizes digital assets as commodities, which would put the Commodity Futures Trading Commission (CFTC) in charge of overseeing them. However, this is up for debate.

Regulations would put consumer protections in place and make crypto assets more transparent. This could attract institutional investors, who haven’t yet invested in crypto due to its high level of risk, to finally join the crypto sphere.

If this happens, experts speculate that regulation could be a good thing for crypto as investments from large firms could stabilize prices.

And stability is currently what crypto needs to attract more investors and survive. Since its high point in November of 2021, crypto has lost more than half of its market value. Coins, including Bitcoin, are continuing to fall in price with no end in sight.

Not only that, but reports of scams, theft, and fraud involving new coins, crypto wallets, NFTs, and the like occur nearly every day. This, combined with falling prices, has made investing in crypto far less enticing than it was just one year ago.

The regulations in the U.S. are not yet signed into law, and they aren’t the only piece of the puzzle. Other countries are also moving to regulate crypto sooner rather than later, while some countries have banned it entirely. However, as home to the largest number of crypto mining activities, exchanges, and investors, the regulations the U.S. puts in place in the coming months are likely to be a guide for the globe.