How Do Regulations Affect the Cryptocurrency Market?

To better understand the effects of cryptocurrency regulations on the market, we reached out to industry professionals for their insights. From clarity and certainty for investors to higher compliance and due diligence standards, here are the top four impacts these experts, including CEOs and Marketing Directors, have identified and how they’ve adapted to them.

In a rush? Here are the expert answers to the question, “How do regulations affect the cryptocurrency market?”

Clarity and Certainty for Investors
Oversight and Control Introduced
Legitimizing Crypto and Encouraging Innovation
Higher Compliance and Due Diligence Standards

Clarity and Certainty for Investors

Many investors subscribe to the theory that cryptocurrencies can eventually change the very rules of global finance. They now have long-needed clarity and certainty to invest in digital assets. According to the PWC global crypto regulation report 2023, cryptocurrency regulations brought long-needed clarity and certainty to digital assets. This makes investors feel safe while using cryptocurrency.

Now, you can find more sensible and consistent regulation of the crypto market around the world. The adoption of regulation helps investors make the right decisions because now there are no misconceptions about the digital asset. If there are some, the government can make decisions about them.

It was difficult to adapt to the government’s regulations on cryptocurrency. I started by going through the highlights and matching them with what I was using crypto for. After that, I studied the rules and regulations carefully.

Saikat Ghosh
Associate Director of HR and Business, Technource

Oversight and Control Introduced

Cryptocurrency regulations have had a significant impact on the market by introducing a level of oversight and control. These regulations vary across different countries and regions, but they commonly aim to address concerns such as money laundering, fraud, tax evasion, and investor protection.

Cryptocurrency exchanges and other businesses in the industry have implemented several measures, including:

Enhanced Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures
Increased transparency and reporting requirements
Compliance with sanctions and other laws

These measures have made it more difficult for criminals to use cryptocurrencies for illegal activities and have helped to build trust with regulators and investors.

Bowen Khong
CEO, GameDayr

Legitimizing Crypto and Encouraging Innovation

Regulations for cryptocurrency have done two things.

First, they legitimized crypto in the minds of consumers. It’s odd, but people tend to think something isn’t legit until the government tries to regulate it. Second, they push people to develop new ways to get out from under regulations and do things that aren’t controlled by the government. That could be creating new crypto or finding ways to slide through current regulations.

Both things have influenced the crypto market over the past couple of years, and the effects have mostly been positive. What I’ve done is treat crypto like I do stocks. It can go up or down, but you have to be in it for the long haul to gain from it.

So, I spend little on crypto, even though it spends. I diversify my buying among some of the more well-known ones with only a little in emerging currencies. I also continue to buy regularly as I see the market drop somewhere I can get some crypto a little lower than what’s expected.

Baruch Labunski
CEO, Rank Secure

Higher Compliance and Due Diligence Standards

The most significant impact that cryptocurrency regulations have had on the market is an overall increase in compliance and due diligence standards. Increased regulations have resulted in exchanges, brokerages, and wallet providers having to adhere to stringent industry standards when performing custodial and transactional duties.

To adapt to this, I have implemented best practices such as KYC/AML compliance procedures, improved transaction monitoring, and more stringent trading requirements. I have also increased my focus on data security and encryption to ensure the safety of all user funds. Furthermore, I have started to proactively communicate with regulatory bodies to ensure that I am always in compliance with the latest regulatory changes.