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Who's afraid of regulation?

By Tyxke | Think Crypto | 5 Nov 2021


Bitcoin (BTC) and Ethereum (ETH) are reaching new highs, Zuckerberg is announcing a major change in Facebook’s approach that will involve a metaverse, Ripple (XRP) versus SEC drama is gaining media exposure over and over again, major crypto projects are being developed worldwide: we are seeing, timidly, the crypto market being taken seriously for the first time.

Now, regulation is not a question of if, but when will happen.

Our financial system skeleton's is regulation. Today we still need approval from bank managers to withdraw any great amount of money from our own personal accounts. And if you wish to exchange any national currency for another one, you will pay sweet taxes in name of economic health. We became hostages of this financial system and its rules.

There is no coincidence that Bitcoin emerged in 2008, in the end cycle of a global economic crisis and high inflation rates everywhere. Bitcoin came to light as a hope of economic freedom, with no middle man or higher government to tell how we going to spent, manage or do with our cash. It was a dreamland.

The world is changing. Blockchain already proved its worth for the tech industry. Sharks and Whales of Wallstreet are little by little occupying crypto's oceans. More than just attracting new investors, the crypto market is experiencing a lot of support by private (and public!) institutions..

The world is changing very fast. Cryptocurrency isn’t a peer-to-peer exchange of value anymore, but a precious asset with countless use cases and intrinsic value. This isn’t a bald statement: Bank of America said that crypto is too big to ignore, Goldman Sachs is joining team with The Block to inform hedge fund investors on crypto, El Salvador, besides the problems, had a profit of 8 millions just by establishing Bitcoin as a legal currency, Cardano (ADA) is forming partnership with Ethiopia to its digital revolution and Ethereum is becoming the preferred bet of institutional investors.

With big money being dumped on crypto, bureaucrats starts to look the digital currencies with greedy eyes. We don’t know how, but we can know that regulation will happen and it's near.

In crypto's communities, there are “crypto purists” who will say that regulation will be disastrous  and chaotic, that will kill de decentralized spirit of crypro. This could be the case, specially, during the coming years when unskilled legislatives systems will still be trying to get what the digital cash is all about. Yet, we are already in a quasi-regulated market.

The gateway for crypto to newcomers are institutional exchanges, like Binance, Huobi or OKEx, all these are private companies that responds to legislative system of rules and laws of different countries that they are based. For example, a Brazilian investor had its account froze on Binance, with 100 Bitcoins in it and can’t take it back. Like a bank that has obligations with its customers, this is one case that regulation can be helpful, to clearly protect our rights as consumers and owners of cryptocurrencies against autoritatives terms of service of institutional exchanges.

Another thing that will be happening after when regulatory process starts is that a lot of money will begin to flow to the crypto market. Retail investors distrusts crypto, their money are either in stocks or in banks, and institutions, because unclarity and lack of regulation, usually, stays alway from crypto too. Gaining public recognition from regulators will make it easier for new investors join us.

Do crypto needs this kind of recognition? No, not at all. By itself, crypto walked a long way and already showed how valuable it can be. However, this will happen sooner or later. Institutinal recognition, as I said earlier, is already here, the next logical step will be governmental, regulatory process and recognition. We can only wait and see.

Besides our main preoccupations, the regulatory process will not compromise much of our autonomy as investors. There’s no scenario that regulators will be able of shutdown every DeFi and track every cold wallet that there is. We will still be able to buy any privacy coin, like Monero (XMR) or ZCash (ZEC) to protect our identity against government surveillance and persecution. In fact, this breed of coin will probably find new highs during and after regulatory process.

Still, this ongoing transition phase, from quasi-regulation to full regulation makes a good investment opportunity. The token LCX, from Liechtenstein's Exchange, is hitting new ATHs since the company is going after trust and compliance in EU and Liechtenstein. Crypto projects with institutional support, like Constelation (DAG) that has a partnership with the U.S. Airforce, Ripple, which has partnerships with banks worldwide and Hedera (HBAR) with big-tech companies besides, will thrive for compliance to not be left behind. Probably, regulatory compliance will be something not only demanded, but desired for good crypto projects and institutional investors. Elon Musk, for example, stated that Tesla would not be accepting Bitcoin over climate concerns. Again, it’s not if they will need to comply with regulators, but when.

“Regulation is necessary”, said regulators. For us, investors, not necessarily. But we need to be prepared for whatever will happen. Rather than fight against something that, historically, happens over and over again, and will happen again, we need to reflect and think what we can do when this happens. And maybe, if we think rightly, we can do what we are doing all these years: find an opportunity to grow more than we already have.


This text represents the author's opinion only and should not be taken as financial advise


Hi guys. This is my first time posting here. English is not my first language so, please, be nice in the comments.
I will post other texts, probably, to try to improve my English skills. If there's anything that you think I can improve, go ahead and comment bellow.

Thank you if you read until now. 

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