Hundreds of millions of dollars are being invested in Web3 initiatives, non-fungible token (NFT) projects, and play-to-earn games, among other things. New regulations may be able to assist this business to grow even more.
What are these regulations and what changes can be anticipated? Let’s find out!
From the White House
The market applauded the White House’s announcement of President Joe Biden’s executive order directing federal agencies to research digital assets and cryptocurrencies. Consumer law, economic stability, illegal dealings, US competitiveness, access to financial services, and ethical innovation are among the six primary themes addressed by the initiatives.
When the news was made, cryptocurrency prices skyrocketed, but investors are still underestimating the impact of regulation on digital assets.
Cryptocurrency: An Empire of Innovation
Trading tokens dominated the crypto market for the better part of the previous decade. Trading cryptocurrencies, on the other hand, is quite similar to trading currency. The coin itself does not have many core utilities; rather, it is what programmers do on the blockchain that keeps cryptocurrencies attractive.
In simpler words, when people are talking about the usefulness of cryptocurrencies, they’re talking about the underlying blockchain — not the cryptocurrency itself. NFTs on the Ethereum blockchain, for instance, may be developed with smart contracts that specify where rewards should be distributed if the NFT is sold, but they are not Ethereum coins.
The cryptocurrency becomes the currency that allows the blockchain to function. On Ethereum, it even permits blockchains with additional qualities to be created on top of the Ethereum blockchain, such as Polygon, which is referred to as a Layer 2 blockchain technology since it is based on Layer 1 Ethereum.
What individuals create on top of the blockchain will be the source of possible innovations from cryptocurrencies and blockchains. NFTs and decentralized finance are part of the picture, but we might also see new digital identities, wallets, residences, and anything else developers come up with. Cryptocurrency is all about innovation.
What’s in it for Investors?
The Biden administration has asked the Treasury Department to analyze crypto and make policy suggestions. Regulators should also provide proper control and protect against any financial market risks presented by digital assets. With this news, the amount of money that has been pouring into cryptocurrency and blockchain startups is incredible. Crypto funds worth millions of dollars are being raised by venture capital firms.
Investors are already pouring money into this area, and if the laws are clarified further, this investment might skyrocket, resulting in tremendous advances over time.
As of now, you can calculate your crypto taxes using the cryptocurrency tax calculator. That, combined with a typical tax calculator can make the entire tax filing process significantly easier for crypto traders. However, there is also a possibility that with the change in crypto regulation, there will also be shifts in the existing crypto tax scenario.
The Bottom Line: Regulations for Innovation
One of several reasons why cryptocurrency investors, entrepreneurs, and developers have sought regulation is so that they can understand the laws of the game. The new policy agenda eliminates a major ambiguity for a sector that has already seen multiple regulatory snags and controversies.
And that is exactly why regulation, particularly in the United States and Europe, is often regarded as beneficial to cryptocurrencies and investors. Billions of dollars have already been invested in the business, and the appropriate legislation might provide enough credibility to unleash much more potential from the blockchain.
FAQs
1. Is crypto trading regulated?
The trade of crypto-assets is governed by a variety of federal and state bodies in the United States. Under US securities regulations, a virtual currency that fits the criteria of security is regulated by the Securities and Exchange Commission (SEC).
2. Is crypto regulated in the US?
In the past few years, the United States has built a mosaic of cryptocurrency legislation, with state and federal politicians taking turns attacking different aspects of the business. Several regulatory bodies, including the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Internal Revenue Service (IRS) are closely watching the activities of the burgeoning crypto industry.
3. What does Biden’s executive order mean for crypto?
The market applauded the White House’s announcement of President Joe Biden’s executive order directing federal agencies to research digital assets and cryptocurrencies. Consumer law, economic stability, illegal dealings, US competitiveness, access to financial services, and ethical innovation are among the six primary themes addressed by the initiatives. Billions of dollars have already been invested in the business, and the appropriate legislation might provide enough credibility to unleash much more potential from the blockchain.