The White House is considering steps to increase national security. This will include forming a regulatory framework for cryptocurrencies.
Regulations would wreck bitcoin and other cryptocurrency prices. It would add layers of checks and balances. Furthermore, crypto exchanges will have more reporting requirements to regulators. While this will improve national security, the uncertainties could weigh on cryptocurrency prices.
Regulations Not Needed
Bitcoin and cryptocurrencies are the best performing assets in the last decade. An unexpected need to regulate them might end their strong performance. Crypto investors might consider treating the proposal to regulate as a distraction. Still, government regulations could lead to the legitimization of the currency. Along with worldwide acceptance, countries will have another means to facilitate transactions.
Risks
Regulations would undermine the purpose of crypto. Crypto is anonymous, easy to use, quick, and unregulated. Adding regulations would take time to develop. It will add to crypto confusion. Already, platforms need to help customers differentiate from among the thousands of crypto currency choices.
If the government legitimizes a few of the cryptos, it would lead to a price spike in them. Those that the government outlaw would plunge in value.
Expect, for now, the government to spend more time researching the platform, miners, and value of each cryptocurrency before having a regulatory framework in place.
