Hello Bitcoin World, the government is coming. Yes, the European Union is going to regulate crypto assets. You may not blame the government when you see the level of wash trading (buy from one broker, sell via another to distort price) happening in the unregulated crypto world. You will expect better collacterization disclosures now.
Last month, Microstrategy’s CEO Michael Saylor called on governments to step in and save the crypto industry from total collapse by cracking down on crypto industry’s shaky practices. It is a call that has been widely debated, but the U.S. and other leading economies have been dragging feet, focusing only on combating the use of cryptocurrencies to evade tax, launder money and sponsor terrorism.
Based on months of relentless bear market that saw the crypto industry lose about $2 trillion of its value, the European Union is moving to enact a set of laws that will regulate the industry.
Reuters reports below that the bloc has agreed on ground-breaking rules for regulating crypto assets, according to a statement issued by the EU lawmakers on Thursday.
The fact is that economies could be affected if people use fiat currency to collateralize trading of altcoins, and during deteriorating margin calls, are asked to come clean. This is why regulation is important.
Today, many brokers require BTC (bitcoin) and that is why BTC price correlates with altcoins: if you buy altcoin via margin and the broker requires BTC for collateral, if that altcoin fades, you must sell BTC to compensate. Magically, the “finite” BTC begins to behave like most altcoins on price elasticity.
Tekedia Mini-MBA edition 14 (June 3 – Sept 2, 2024) begins registrations; get massive discounts with early registration here.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
People, one thing is evident if you read AO Lawal’s Economics textbook in secondary school, you would have noticed that over time, equilibrium is attained in markets. For Bitcoin and cousins, a government fudge factor via regulation could make that happen. And just like that, Bitcoin becomes another asset class with boring returns but earthly loss barometer. That may not be a bad outcome!
EU Agrees to Tame ‘Wild West’ Crypto Market with Regulations
---
Register for Tekedia Mini-MBA (Jun 3 - Sep 2, 2024), and join Prof Ndubuisi Ekekwe and our global faculty; click here.