A study has found out that government regulation affects Cryptocurrency prices. Although this is a fact that is deemed to be correct by most experts and investors. The interesting fact is in the detail that regulation has positive impacts on Cryptocurrency prices. This is in contrast to the long-held notion that regulation affects BTC prices and that of other Digital Assets negatively.
The substance of regulation, however, matters in this assertion. For instance, banning of limiting Cryptocurrencies as in the case of Bitcoin in China leads to a plunge in the particular price. In contrast, positive regulation through policies such as the US SEC actions often leads Crypto values to rise. In the context of this text, the focus is on regulation through policies that do not ban or restrict the trade of Cryptocurrencies.
Regulation Does Not Always Lead To A Bearish Run
The study reveals that some of the topics that hurt trade volumes and lower prices are as follows;
• A ban on Crypto trading
• Exclusion of securities laws on Cryptos
• A decision to give preference of traditional fiat currencies over Cryptocurrencies
• Laws to combat money laundering and terror financing by targeting Cryptocurrencies
For instance, the US Securities and Exchange Commission (SEC) recently disapproved ETFs, this resulted in a plunge of prices as the within hours of the news. On a second example, Japan’s Financial Services Agency took measures to address money laundering on Bitcoin and other Digital Assets resulting in a bearish run.
On the other hand, other non-negative policies that seek to protect investors while considering the plight of Blockchain firms correlate to market gains. This type of policies is currently forming the bulk of new regulation as the world starts to accept Cryptocurrencies.
Laws Targeting Bitcoin Affects Other Altcoins
When regulators, such as Reserve Bank of India, the Royal Bank of England, US SEC, Japan’s FSA, etc., target Bitcoin, the general trend that the Coin take often has an impact on other altcoins such as Dash, ZCash, Monero, Cardano, Litecoin, Bitcoin Cash, and Ethereum.
The only major exception is Ripple (XRP). It is often viewed differently by investors due to its centralized management, permissioned access, and other features. Moreover, Ripple is making head-starts into the conventional world where it is being accepted by institutions such as Banks that wish to adopt Blockchain platforms but remain with a form of control over them.
Regulation Was Also Found To Affect Other Crypto Trading Aspects
The study reveals that regulation does not only affect prices but also other aspects of Cryptocurrency transactions such as trade volume, Crypto mining activities, and even the number of wallet addresses. The change of pattern coincides with the favorability of the policies to investors and miners.
Regulation Parameters Are Changing
As 2018 progresses, there has been intense lobbying by Blockchain organizations. In Japan and other countries, there are organizations such as the Self-Regulating Organizations (SROs) that advocate for the interests of Cryptocurrencies. In the US, there are lobby groups that work for the interest of Cryptos in the corridors of power and to the US SEC. Further, the SEC has a Digital friendly vice president whose influence on policies have been yielding positive results. This means that going forward, regulation will be mostly a good thing for Cryptos as it will be giving to investors the much-needed confidence.