What is the role of regulation in crypto?

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

As crypto becomes more and more popular with every boom cycle, the calls for more regulation have also become louder.

But what is regulation and what influence does it have on crypto?

Regulations are laws and directives that governments put in place to influence a certain industry or section of the economy.

"But wait", you say! Crypto was supposed to be something governments can't mess with! Clearly, rules must be a bad thing!

But things are always more nuanced than they seem. Sensible regulation can be a very good thing.

Imagine laws that force the issuers of tokens to be more transparent, or force exchanges to educate people about the risks of a crypto investment. Those could prevent a lot of crypto-novices who are blinded by the potential for a quick profit from losing money.

Likewise, regulations could increase innovations. The status quo is, that many countries simply don't have any crypto regulations yet. And that means companies who want to build something in the space run the risk of being shut down or even be criminalized in the future. One example is crypto exchange FTX which relocated to Hong Kong from the United States.

Of course, regulations must still allow innovation. If they are so strict, that they simply make using or building blockchains impossible, that would swing the pendulum the other way.

And there you have it: As always, it depends. But in either case - we are sure to see much more talks about regulations in crypto.

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.