Business risk and regulatory issues are changing in a volatile and uncertain world. The COVID-19 pandemic has increased the rate at which risk events take place and the extent to which they spread and influence regulatory change. As business leaders everywhere, we are preparing for the unexpected to stay afloat. Organizations are working to cultivate a new trait: resilience.
Risks and Opportunity in regulations
Notwithstanding government guidelines, many states have instituted enactment on digital currency. Know which regulations apply to your state. While the bill would need to pass to put the Biden report into action, the report shows U.S. regulatory action will take place.
What Investors Should Know?
The Biden administration report suggests stablecoins may become an effective digital payment system in the future, not only as a means of reducing fees on crypto-to-crypto trades but as a means of increasing crypto adoption.
Any new regulation about cryptocurrency could impact investors’ portfolios as it is still in its relative infancy as an asset class. Investors probably do not need to make immediate changes to their portfolios due to the proposed new legislation. For long-term growth, experts recommend investing in more established coins like Bitcoin or Ethereum rather than stablecoins, as they are not as good a store of value as more volatile cryptos.
Additionally, you should make sure that the cryptocurrency exchange you choose conforms to evolving federal and state regulatory requirements in the United States before any guidance is released. Among them are many well-established U.S.-based exchanges with high-volume, like Coinbase and Gemini.
Can Government Regulation Control Cryptocurrency Prices?
For government intervention to affect the price of cryptocurrencies, there are a couple of ways. First, governments can regulate the price of assets, such as fiat currencies, by selling and buying in international markets.
As a second measure, they can create regulations that lead to higher costs of doing business for an asset class. A good example is the proposed regulation of bitcoin being considered across various states in the United States.
Governments can restrict cryptocurrency exchanges by imposing controls on them. Finally, states often require surety bonds or fiat currency equivalents for cryptocurrency exchanges operating within their jurisdictions. It is demonstrated by gold, which has import restrictions in several countries. In the case of cryptocurrencies, which have decentralized ledgers and are extranational, all three actions will fail.
Cryptocurrencies will need to be regulated through well-coordinated efforts across several economies. However, given the differing levels of interest in cryptocurrencies and their impact on national economies there, this might be a difficult task.
Why NFT will more likely be regulated later then other crypto areas?
The non-fungible token, or NFT, is becoming an increasingly important class of digital assets that have attracted the attention of investors and consumers’ attention. NFTs have been around for a long time, but they only came into public awareness in the past two years.
NFT technology is emerging as a way for celebrities, creators, and athletes to commercialize their brand, image, or work. Although this asset class is still in its infancy, it poses many legal and regulatory issues. Below, we describe NFTs and some of the most pertinent issues to the United States.
Key Takeaways of NFTs:
- New financial technologies (NFTs) have gained much traction among consumers and investors in the United States, but regulatory and legal frameworks have lagged.
- The intellectual property rights granted by an NFT determine its use and value, including permission to use, copy, display, modify, and distribute its contents.
- There is no immediate state administrative direction on NFTs. However, a couple of states have made laws that could hold NFTs under their domain. FinCen has not given any counsel explicit to NFTs. In any case, it has distributed direction for the most part concerning how the BSA and FinCEN guidelines identify with virtual money that could apply to NFTs.
- NFTs probably will be focused on with more noteworthy recurrence by cybercriminals for monetary profit or by people in any case confined from conventional business sectors. NFT stages need robust controls to prepare for such dangers.