Cryptocurrencies are the future currencies, and they come with multiple benefits compared to fiat currencies. This is why millions of traders embraced digital currencies. You can take, for instance, Bitcoins, the greatest Cryptocurrency in terms of market capitalization.
According to a study, three in ten Americans in the age group between 18 to 29 own Bitcoin. So you can understand the speed with which it is spreading across people. The main reason behind it was the lack of regulation. You do not really need to inform anyone about the trading, even the Government. So trade safely using bitcoin trader. The platform can ease your trade.
But slowly, the Cryptos allegedly became the medium of operations for the dark world. Therefore regulations become one of the dire needs to safeguard the interest of the investors. But it’s indeed a Himalayan task. Therefore we discuss the challenges that make Cryptocurrency regulations difficult.
Challenges That Make Cryptocurrency Regulation Difficult
As we mentioned above, the regulation of Cryptocurrencies is the talk of the town. The stakeholders, like investors, think that the regulation is in dire need in this scenario. But regulation of Cryptocurrencies is indeed tough for more than one. Let us try to understand them here.
1. Decentralization
Remember, the main characteristic of Cryptocurrency is decentralization. The Central banks of the respective countries regulate the banking system of the country.
Hence indirectly, the finance system comes under the government’s direct control. They can print notes during recessions. So under a centrally governed system, the government undertakes the policies. But this was not possible with Cryptocurrency. It does not come under the radar of the government. It only follows the direction of the centralized banks.
Cryptocurrency only functions according to the protocols of the developers. Many investors opted for decentralized Cryptocurrencies as an alternative to centralized financial systems. But during the great fall of the Bitcoins, they had nowhere to go. They realized the need for regulations.
2. Diversity In The Protocols And Governance
Different Cryptocurrency systems have different governance structures, protocols, and regulations. Some Cryptocurrencies have their hierarchy or order of governance. But it needs to be known to the investors because the creators have opted to keep the hierarchy concealed.
On the other hand, some Cryptocurrencies have centralized systems; that is, they have a governing body of corporations and established personnel.
Consequently, during an emergency in a bad market, it is impossible to put fingers on an entity of groups. Therefore it becomes thoroughly difficult to question the crypto. This might be one of the reasons enchaining Cryptocurrency remains a tough ask.
3. Rapid Rise Of The Value Of The Assets
The rapid rise in the value of the assets can be one of the reasons why it is difficult to regulate Cryptocurrency. You can consider the example of Bitcoin prices. Bitcoin was a mere 1300 USD during early 1930, but by the year the 2020s, the value of the Cryptocurrency touched a massive 60000 USD. You do not need to show your credit scorecard to the authorities to get loans; you do it with the banks.
The rich get loans easily as compared to the poor. Thus Cryptocurrency has successfully democratized the fundraising abilities of beginners. This shows the need for a specially designed set of regulations that allows smaller companies to raise the required funds for business. So you can understand how difficult it is to regulate Cryptocurrencies.
4. Regulatory Diversity
Many Crytocurrencies relocate to the nations where conducting business is favorable to its concept. So if you put regulations on these digital currencies, you can not possibly do it because the Cryptos follow the protocols of their developers.
Please remember that the Cryptocurrencies were designed to be developed on the peer to peer basis. So there was that element of concealing and privacy. But if it comes under the regulation, it would completely deviate from its ultimate aim and objective.
Thus you understand how difficult it is for the regulatory bodies to control Crypto. With the regulations, they would completely lose track.
Closing The Discussion
Cryptocurrencies are designed to serve the needs and requirements of tomorrow. It comes with many benefits and puts a challenge to the fiat currencies. So people are thinking of bringing Cryptocurrencies under regulation. But there are challenges, and one has to accept them and preserve the decision for the days to come.
