- Cryptocurrency is not regulated because no strict rules and legislations exist.
- SEC has been tryingto regulate the cryptocurrencymarket.
What Unregulated Means?
By definition, unregulated means, a lack of a centralized body to control the system.
There are no rules and regulations applied by any central authority to control its activity for the security of those involved in the activity.
If we talk about this in terms of financial industries, it clearly means that the money of investors invested in an unregulated body remains at risk of fraud, harassment, and other malpractices.
Why is Cryptocurrency Unregulated?
It is widely known that the crypto industry is unregulated, which is the reason why many investors are not comfortable investing in cryptocurrencies. This is because cryptocurrencies lack a strict set of rules that all the bodies have to follow.
Bitcoin and Ethereum, or any cryptocurrency, are not regulated by a central bank. Effectuating appropriate regulations on cryptocurrency would secure investors’ money. Not only this, but it will also build up investors’ trust in crypto and attract investments in the future. This could play a key role in crypto being accepted by a larger no of investors. This will open the door for more opportunities for investors.
The main reason why cryptocurrency is not a regulated industry is that it is now in many countries. Many countries have included cryptocurrency in the gray area. This is because they consider it as a threat to their financial security.
The most popular cryptocurrency Bitcoin is also unregulated. This is because Bitcoin is not backed by any stable currency. As a result, rapid fluctuations have been observed in its value in the past.
What impact cryptocurrency regulations will have on the market is debatable. Whether they will open new opportunities for investors depends on the regulations enforced. On the other hand, it is expected that too much of regulations can also kill the market’s growth. But enforcing regulations can help develop a sustainable ecosystem for the cryptocurrency space.
Role of SEC in Crypto Market Regulation:
The SEC has already taken some strict actions toward regulating the cryptocurrency market. It is widely known that it publicized a lawsuit against Ripple. Not only this, it also targeted exchanges such as Coinbase . The chairman of the SEC has a very clear statement about cryptocurrency. He considers it as the “Wild West.”
Common Scamming Techniques in Crypto Market:
Scammers use different techniques to deceive investors in the cryptocurrency marketplace. For example, a term that is very popular in the crypto market is scam coins.
Scam coins are nothing but coins built by developers to scam investors. The most common method they use is they release a coin that is of very nominal value; now, they buy a lot of quantities of their coin to create an effect that it is a very successful cryptocurrency. After seeing its success, many investors invest in it, and once the creators receive a sufficient amount, they dump the cryptocurrency, and investors lose all their funds.
Due to such scams, cryptocurrencies are losing trust and hence needs to be regulations.
