The cryptocurrency space is a fast-moving, volatile place that keeps participants, observers, and regulators on their toes. Get the latest crypto news on bitcoin and other digital currencies, cutting-edge blockchain updates, Web3 developments, and more.
Cryptocurrencies have grown from digital novelties to trillion-dollar technologies with the potential to transform financial systems around the world. With prices wildly fluctuating and the potential to be used by criminals for money laundering or terrorist financing, governments have begun to regulate the sector.
Volatility in the nascent industry and a lack of regulation have fueled concerns over fraud, tax evasion, cybersecurity, and other issues. Unlike credit cards, for example, which allow consumers to make chargebacks if they are hacked, there is no consumer protection for cryptocurrency owners. Moreover, bitcoin mining requires massive amounts of energy, and the cryptocurrency’s environmental damage has led some governments to ban bitcoin trading.
Some regulators have begun to craft rules for the emerging crypto and DeFi sectors, including requiring banks that hold cryptocurrencies to set aside enough capital to cover possible losses. However, other governments have banned cryptocurrency transactions and mining entirely or taken a hands-off approach. In the United States, the SEC is working to regulate the space and introduce it to traditional securities laws. Regardless of their regulatory status, cryptocurrencies have been the engine of a new paradigm for money that removes the need for centralized intermediaries such as central banks to enforce trust and police transactions between two parties.