Regulation is one of the main problems of cryptocurrencies. Although most countries have adopted a particular approach to regulating cryptocurrencies in their territories, most are simply trying to adopt the rules set for conventional cryptocurrencies.
Cryptocurrency regulation will not only provide clear boundaries regarding these assets. But, it will also provide a legal status which will have a positive impact on the cryptocurrency industry.
The legality of cryptocurrencies has some significant positive effects, especially when compared to situations where cryptocurrencies are not recognized or deemed illegal. Here are some of the positive impacts of cryptocurrency legality:
1. Legal recognition: The legality of cryptocurrencies provides official recognition by governments and financial institutions, thereby helping to solidify their position as assets and legal tender in the economy. This provides clarity for users, traders and investors who wish to participate in the cryptocurrency market.
2. Industry and employment growth: When the government recognizes and regulates cryptocurrencies, it creates a conducive climate for the growth of industries related to blockchain technology and digital assets. Many companies, from crypto exchanges, digital wallets, to companies providing blockchain-related services, can operate legally and create new jobs.
3. Avoidance of illegal activities: The legality of cryptocurrencies helps reduce the potential for their use for illegal activities such as money laundering, fraud, or terrorist financing. When cryptocurrencies are highly regulated, users must pass strict identification procedures and transactions are publicly recorded, making it more difficult for criminals to act.
4. Technological innovation: When the legality of cryptocurrencies is recognized, governments and regulatory bodies can collaborate with technology companies and startups to develop innovative blockchain-based solutions. This can create positive impacts in various sectors, such as logistics, supply chain management, finance, to tax collection.
5. Access to financial services: In some countries, many people do not have access to the formal financial system. Cryptocurrencies can be powerful tools for providing access to financial services for those who do not have a bank account or traditional financial infrastructure. The legality of cryptocurrencies can open doors for financial inclusion and empower previously marginalized communities.
6. Transparency and security: Blockchain, the technology behind most cryptocurrencies, offers a transparent and secure decentralized database. Transaction information is stored in interconnected and encrypted blocks, reducing the risk of data manipulation or fraud.
However, it is also important to remember that the legality of cryptocurrency is by no means without its challenges and potential negative repercussions. Some of the problems that may arise include the potential for unstable regulatory changes, security risks from cyber attacks, and high price volatility. Therefore, it is important for the government and industry players to work together in developing a balanced and sustainable framework to maximize the positive impact of cryptocurrency legality.
Positive Impact if Cryptocurrency is legalized:
* The volatility is reduced
If you pay attention to the chart of one of the cryptocurrencies such as Bitcoin, we can see how the price changes can occur quite significantly. One day it strengthens tens of percent and the next day it can weaken tens of percent as well. This means that the level of volatility of Cryptocurrencies, especially Bitcoin, is quite large. I think the large level of volatility occurs because Bitcoin transactions are still relatively infrequent.
When Cryptocurrency has been legalized, it is likely that the impact that will arise is that the transactions will be even greater so that the level of volatility is reduced. No more strengthening or weakening of prices by tens of percent in a short time. For some people, a decrease in the volatility of cryptocurrency (Bitcoin) is a bad thing, but for me, a decrease in the level of volatility of cryptocurrency (Bitcoin) is a good thing because the chances of the price weakening by up to tens of percent in a short time are reduced.
* Trading transactions are faster and easier
If you look at the current situation, we can shop online at local merchants and pay with quite a lot of payment methods, such as credit cards, debit cards, mobile banking to e-money. However, for online shopping at global or international merchants, it is almost certain that they only provide a choice of payment methods, namely credit cards.
So, to this day the number of credit card owners is arguably not that many, limiting their ability to shop at global or international merchants. But if one day cryptocurrency is legalized, it is likely that many global or international merchants accept payments using cryptocurrency so that the impact that arises is that trading transactions can run faster and easier.
Negative impact if Cryptocurrency is legalized:
* Reduced function of the central bank
One of human nature is to want to carry out all activities more practically and efficiently. This is offered by Cryptocurrencies that use the blockchain method. All transactions occur practically and efficiently making it very easy for its users. If you think about it, there is actually no negative impact when, for example, cryptocurrency is legalized.
In fact, many central banks around the world are starting to try to adopt the blockchain method to make their currencies digitally and decentralized. So, the impact or side effect of a decentralized transaction recording system is that after a while the central bank is no longer needed. In fact, many technology and financial observers predict a more severe impact, namely that commercial banks will no longer be needed in the future.
Overall, there are many positive and negative impacts that cryptocurrency can have if it is regulated by the government. This will open up new opportunities for crypto investors, but also presents certain risks that must be considered. Thus, it is very important for market participants to remain cautious and pay close attention to any regulatory changes that occur before they make investment decisions.
