Bitcoin and cryptocurrencies are still floating in a legal grey area. In fact, one of the reasons why Bitcoin’s price made a nosedive from almost $20,000 in mid-December to just around $6500 now is due to the regulatory problems that many investors face. There are countries that are clamping down on crypto-related activities for different reasons. There are those that fear cryptos being used for money laundering activities. On the other hand, you have miners that are taking so much energy.
But recently, US Securities and Exchange Commission considered both Bitcoin and Ethereum as commodities and not securities. And this is a big deal. And recently, Bitcoin, for the first time, was mentioned in the US Supreme Court. Though the case isn’t actually dealing with cryptos but rather whether an employee stop option represents taxable compensation. Justice Stephen Breyer said that it is time to have a “broader understanding” of what money is. He even said that “..perhaps one day employees will be paid in Bitcoin or some type of cryptocurrency”.
Will regulatory changes on Bitcoin finally give it the necessary boost that it needs? It has been recorded that since 2018 began, Bitcoin already lost more than half of its value.
Bitcoin’s Price Still Struggling
However, it is true that Bitcoin’s price has been struggling lately. After a brief recovery yesterday after the Bithumb hacking incident, the price dropped yet again from $6,721 to $6,514 today. There are experts saying that Bitcoin could even reach $5,000.
If you will ask Luis Carranza who is the founder of London Fintech Week, he says that there are plenty of reasons to be optimistic about cryptos in 2018. He mentioned that “crypto is unpredictable. There are massive spikes and drops. $4,500 could be the bottom, but there is nothing preventing $2,500 from being the bottom”. He even mentioned that “even if the price drops to $1,000 there’s nothing preventing another surge to $14,000”.
Carranza also mentioned that it is all about the regulations and how the market is going to mature this year. He said that “The challenges for 2018 all involve regulation and the market maturing; with larger sums, crypto is becoming a grown-up game”.
Regulations to Protect Investors?
Japan has been making its own move towards regulating cryptocurrencies. The move was initiated by regulators after Coincheck has been hacked. Japan came up with new rules when it comes to cryptocurrency exchanges making sure that the incident won’t happen again.
If you will ask the acting director of Consumer Financial Protection Bureau Mick Mulvaney, he mentioned that the US government should find the “sweet spot” when it comes to dealing with the crypto market. He mentioned that it is important to have the necessary regulations that can protect investors.
Maluvaney explained that “We knew at an early point in bitcoin that as with any developing financial technology we need to find that sweet spot… if Mt. Gox became a regular occurrence it dramatically undermines confidence in the markets and prevents innovation. And if we over-regulate and discourage people from entering the marketplace, that has bad consequences too”.