By Markus David
Director of Professional Services
MyChargeBack
Cryptocurrencies are the newest trend in online trading. Bitcoin, Ethereum and other digital currencies can seem easy to purchase and trade. Every day, there is a new crypto broker or bitcoin deal advertised on social media that may seem like a substantial opportunity to earn large returns. However, there are just as many or more fraudulent schemes that should be avoided.
Proposed regulations are designed to protect customers from unscrupulous brokers, false deals, risky platforms, and the dramatic rise in cryptocurrency frauds. In 2021, the. Federal Trade Commission (FTC) reported $770 million in consumer losses from social media crypto schemes. The chairman of the Securities and Exchange Commission (SEC), Gary Gensler, termed cryptocurrencies the “Wild, Wild West” and warned that can cause a financial hazard for consumers.
Nonetheless, many crypto investors have expressed displeasure at the idea of the government creating rules that could police the blockchain. One of the major draws of cryptocurrency is the lack of regulation and the feeling of freedom that many users feel. Cryptocurrency holders feel they are saving money avoiding bank fees or other hassles that can crop up through banking security precautions.
However, more consumers are realizing that they can lose more they gain dealing with an unregulated financial product. Hacking is frequent, and those who make off with funds can hide on the blockchain through anonymous bitcoin wallets. Although crypto trace services and investigations can identify the users, preventing problems from arising in the first place is preferable.
Will Cryptocurrency Be Regulated?
The question of whether cryptocurrency and the blockchain will be regulated is not “if” but “when.” In an address to the Aspen Security Forum, Gensler declared “there isn’t enough investor protection in crypto” and said, “this asset class is rife with abuse, scam, and fraud.”
The reason for delays in regulation isn’t due to a lack of will among government officials, but the fact that there has never been anything analogous to cryptocurrencies and the blockchain, and the concept of crypto regulation may be challenging to develop and grasp.
However, the beginning steps of cryptocurrency regulation have been made in the bipartisan infrastructure bill passed by President Biden. In addition, the Federal Reserve is discussing issuing its own cryptocurrency.
The following are compelling reasons crypto investors should embrace proposed regulations:
- Less volatility in the crypto market
- More protections for investors
- Safe crypto exchanges and platforms
Less Volatility in the Crypto Market
In the 1920s, stocks would rise and fall in value rapidly and were volatile assets. That is one reason the bubble burst and caused the 1929 stock market crash that ushered in the Great Depression.
Crypto assets are behaving in a similar way, and given fears that history may repeat itself, this volatility has raised the alarm among the SEC and other government agencies. This volatility may make cryptocurrency seem exciting, but investors lose much more than they gain. For instance, bitcoin went from $10,000 in October 2020 to $60,000 in April of 2021 and then jumped back down only to climb back up.
This dizzying volatility can wipe out investor positions and make recovery difficult. Regulating crypto assets like other securities and putting safeguards in place to prevent over speculation that can destabilize markets.
More Protections to Investors
Crypto deals are everywhere, on social media, Whatsapp and spam email. Without rules in place and a specific platform for trading these assets, it can be easy for unregulated brokers to simply take customers’ money and disappear.
Issuing licenses and requiring them from cryptocurrency brokers and platforms and implementing requirements similar to a stock exchange will keep investors safer and will prevent consumers from being taken advantage of by Ponzi schemes and unscrupulous brokers.
Safe Crypto Exchanges and Platforms
Consumers depend on crypto exchanges to deal with complaints and keep users’ funds safe. Too often, these exchanges can be passive in the face of customer complaints or crypto frauds perpetrated on their platforms. These protections will make it easier to use cryptocurrencies and can even encourage more people to use digital currencies if they feel they have recourse if something goes wrong.
MyChargeBack Will Help You Find Your Funds on the Blockchain
If you have lost money to a cryptocurrency scheme, seek fund recovery assistance right away. Consult with MyChargeBack experts and get started with your fund recovery claim. We have extensive knowledge and working relationships with more than 450 law enforcement agencies around the world, as well as solutions that can improve your prospects of getting your cryptocurrency back.
