Over the past few months, the entire cryptocurrency scene has been on the edge of their seats awaiting more established regulations from national governments. This uncertainty has left many institutional investors doubtful about putting their money in speculation. Some countries such as India outright banned financial institutions from dealing with cryptocurrency exchanges, and some large organizations such as Facebook and Google banned cryptocurrency ads on their platform. However, recently the tide has been changing as more and more countries have begun to accept the prevalence of crypto.
In the beginning of July, countries such as South Korea and Russia have developed new plans for regulation, which may set a stage for future regulations. According to the press, Russia will have a new category called “digital rights” for tax purposes, and has shown great support in the past. However, China has demonstrated its doubts by banning cryptocurrency exchanges last year, but even that has started to change. The big three Chinese crypto exchanges have reemerged since China has relaxed its regulations.
Although many think that regulations have ill intent on the entire scene, others have probed that without regulations, the market volatility is augmented by market manipulation and fraud, driving many of the institutional investors away. Large firms in the space have tried to combat this by launching stablecoins which are tied to less volatile assets such as the US Dollar in order to reduce the risk in exchanges, but there is still little to challenge the threat of manipulations.
Whether countries decide to categorize digital assets as property or a financial assets, as more solidified regulations are put in place, the market might see a snowball effect of institutional investors joining the space.