When investors buy and sell stocks, they know, at least to some degree, what to expect. Investors in the stock market are protected from fraud and other problems by a lot of rules and laws. On the other hand, the government has not yet made any rules about digital currencies like bitcoin and Ethereum. Investing in crypto assets is riskier than investing in stocks because you can’t be sure of what will happen. Discover the effects of btc on the movie industry.
Many investors have done well because of this. Even though it wasn’t regulated, or maybe because it wasn’t, the first people to invest in crypto made money a decade ago. One reason for this is that the first people who invested liked that there were no rules.
At the top of the market in November 2021, all cryptocurrencies were worth $2.9 trillion. The stock market is worth $48 trillion right now, so this isn’t even a drop in the bucket. But this was a big change for an asset that had only been around for a little more than ten years.
What could happen to cryptocurrency investments if the law changed?
Katherine Dowling is the company’s chief compliance officer and general counsel. She thinks that rules “should let disclosures happen.” Dowling says that he thinks these details will make it easier to understand the whole group of investments.
Institutional investors need to know so much about what’s going on that it’s hard to say enough about it. Institutions care about how they deal with risk, so every investment needs a risk profile. This kind of risk profile can only be made for clear assets, which cryptocurrencies aren’t yet.
For example, the algorithmic stablecoin TerraUSD (UST) dropped a lot in price in May because not enough people knew about it. This also changed the prices of Bitcoin and LUNA, which is a similar coins. A crypto investor from Chicago is suing six crypto venture capital firms for securities fraud because they backed Terra tokens in the months before they crashed.
People who put their money in cryptocurrencies have had a lot of money problems in the past. In 2016, a hack led to the failure of Ethereum’s DAO currency. Ether (ETH) tokens worth $60 million were stolen because of the hack.
How cryptocurrencies are run and how that affects how much they cost.
Many experts in the field of cryptocurrencies think that oversight and regulation will help to keep the prices of digital assets stable in the long run, even if bitcoin laws change in the future.
Since the fourth quarter of 2021, the prices of cryptocurrencies have been falling to levels that have never been seen before. It looks like a lot of regular investors won’t be around to see the market bottom. Even the government of China thinks that bitcoin will lose all of its value in the long run.
But Narayanan thinks that rules will help keep the value of cryptocurrencies stable over time. He says this is because rules could make it easier for institutions to invest, which would make regular investors more likely to put more money into digital assets.
There is a chance that if a lot of money comes in at once, the prices of cryptocurrencies that are regulated will stay the same. This would attract regular investors who haven’t paid much attention to this type of asset yet. This would make things even better and more stable.
This much uncertainty is too much for a big financial company to deal with. He also says that these kinds of investments could help make the asset market as a whole more stable. Reeds say that his clients, both regular people and people with a lot of money, want nothing more than to know what’s going on with their assets. As long as there are no rules, it won’t be this clear in the cryptocurrency market.
Reeds say that worries about how much cryptocurrencies are worth now don’t have much to do with the rules that are coming. Those who invest in the right way should be happy to hear this. In the next sentence, he says that global macroeconomic problems are more to blame for the current drop in the value of cryptocurrencies.
Even though the prices of cryptocurrencies are falling right now, you can’t put the genie back in the bottle. Even if Bitcoin “falls to zero” in the future, it may be hard to imagine a world without cryptocurrencies.
Soon, we’ll hit the limits we’ve been talking about. Right now, a lot of people who invest in cryptocurrencies want to know: What will these laws look like, and who will enforce them?
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