The risks of cryptocurrency lie in that statement.
Crypto is and always could pose a risk to the financial system. The risks of cryptocurrencies are mainly related to their volatility. They are unpredictable, the nameless transaction makes it hard to regulate, and it's cashless.
It's well understandable why no government and especially banks don't like crypto in the first place. But this keeps away the real opportunity of the market. That means economic development as well.
Photo: My own creation using Canva.
In the current global economic situation where we need a high-potential market with real opportunities to grow and distribute resources, crypto can be a good solution. For example, in the third world economy crypto making a real impact though it's not legal/limited in most of the region.
The number one rule that the government implies is by taxing any fiat money used to cash out a virtual token.
It sounds so easy that you may think then why the government doesn't adopt crypto on large scale or regulate it properly! There come the real risks of crypto. It's highly unlikely and nearly impossible that a single authority/organization/govt can do so because of the nature of crypto.
Applying existing regulatory frameworks to crypto assets, or developing new ones, is challenging for several reasons.
But starting with applying the simple rules of taxation, keeping an eye on transactions can bring a framework.
If we look at the stock market, we will see how heavily it is regulated, and these regulations protect investors from fraud and other risks.
However, this can't be implied in the crypto market for many reasons. But regulation has the potential to make the market much safer. It will still likely be a risky investment, but with protections for investors, it's less likely that the market will be able to face as much outside manipulation.
It's a long way to go through.
Seeing this as a whole makes more sense. Because keeping aside this high potential market never stops traders and investors of the market. It's the government's loss, overall, if they fail to regulate and bring crypto into a framework. I believe, there are more opportunities than risks for the investors and stakeholders of crypto if it gets regulated.
Overall, the regulatory responses to the currency will be a positive sign for the market.
What do you think?
