Government Regulators are talking more and more about Bitcoin and cryptocurrencies, especially as the overall crypto market capitalization has grown from under $100 billion to over $600 billion in the past year. Many people talk about the "crypto bubble popping", but to be honest, I think the most worrisome thing is excessive government regulation, which will in turn, negatively effect the crypto markets.
Let's talk today about the recent news from South Korea, as well as comments from the United States Treasury Secretary, Steven Mnuchin, regarding Bitcoin and crypto, and what the long-term risks might be.
Article from Bloomberg and source from video:
https://www.bloomberg.com/news/articles/2018-01-12/mnuchin-warns-against-bitcoin-becoming-next-swiss-bank-account
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I believe there will be a showdown at some point between cryptos and governments. The issue boils down to this: as the crypto market grows, more and more money that would have otherwise poured into stocks, bonds and real estate, will funnel into cryptos, thus destabilizing the legacy financial markets.
This will become more apparent as cryptos go in the multi-trillion territory and sizable selling pressure begins to materialize in global stock markets.
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The larger crypto gets, the more pressure the regulators have to do something..
Especially if something goes bad with crypto and they are the ones that input the regulation, it's a notch on their resume of "We saved the retail investors from crypto!", etc
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So why do they just leave it alone? And yes that is rhetorical.
I think the US government has to really think this one through. On one hand if they try to come in and regulate users of crypto will find ways to get around it. On the other if they do it in a manner that only regulated exchanges I think most people in the space will vary on as they have been. My question is this however. To what extent do they tax crypto? Do they only tax when converted into fiat? Or will they tax every Time crypto is used to purchase (which included crypto to crypto)?
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Regulations help the market in the long term. When an exchange you use gets hacked or the owners disappear with assets, it tends to have a dampening effect as well.
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Regulations, to an extent, might help the market advance. But over regulation could easily stifle and kill innovation within crypto, as well as economic growth.
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In my STRONG opinion, crypto regulations will be less to do with destroying cryptos/blockchain tech, and more to do with ensuring that governements worldwide get their cut (taxes). KYC will be strongly enforced in ALL ICOs, investors activities will be targeted at the fiat entry level through the exchanges, and privacy coins will be demonized and targeted harshly. It should be fairly obvious what is coming in the near future, and if you understand this you will see that MOST of the crypto space will not be negatively affected in any major ways. This is what the China ICO ban was about, this is what the IRS/Coinbase thing was about, and this is what the South Korea exchange raid was about.
Taxes, taxes, and taxes, always remember that when thinking about the likely regulations coming in the near future (shortly before or after tax season this year).
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I, like mostly everyone else in the world, hate taxes.. However, if this is simply about the IRS getting their cut, I'm okay with it.. My issue will be if they completely try to shut crypto trading down. That will hurt, a lot.
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They will only target exchanges that don't follow and enforce wanted KYC rules, ICOs that don't demand KYC rules or coins that can't be tracked... trust me governments secretly love cryptos for the most part, they are just playing hard to get on the surface for now.
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I feel the US may regulate ourselves out of early adopters and may setback our advancements while those who embrace the technology (Japan) benefit.
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Regulation, good or bad, will have to happen no matter what. However, I doubt that the government would be too harsh given the impact it will have in a technology center that is not dependent on location. As this is done digitally, the ideas and tech could go other places. This is exactly what happened to the tech giants who now hold billions of dollars overseas because the US tax law was anti globalization. They should be careful to stagnate progress in such a promising business that is the crypto and blockchain space.
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Regulations in themselves aren't bad if done with good intentions. They can be helpful in stabilizing the market in the long run.
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You can have positive intentions while inputting regulation, and still mess everything up hardcore
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More likely crypto will pop the government bubble!
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Their meddling in the crypto world is going to cause prices to drop as people become scared and not certain of what the future holds. But bitcoin and altcoins are increasingly gaining popularity globally so it will be difficult for any government to regulate the market.
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Good point of view, thanks.
Do you think the government might also be worried about all those people taking out loans to invest (speculate) in cryptos? Given the high implied volatility in cryptos, those people can get into trouble if a significant price drops eventuates... Then you could see s similar impact to the one the sub-prime crisis had almost a decade ago.
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Governments blunder just about everything. Hopefully they lay off the solution to a lot of their problems. Deep down they know they need this tech. They just haven't figured it out yet. Anything can happen i guess. No pain no gain.
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I think regs are going to be needed. I think they will end up going after privacy coins more than trying to force out the whole market. The government just wants its cut.
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Regulations are required to a certain extent because it does help give a sort of "legitimacy" to the whole market. Too much is not good but will have to see how things go on. I really love how people believe almost everything mainstream media puts out, if they just take a bit more time to make sure that what they are saying is true it would be saving them a lot more money and not panic selling. Great video!
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I think short term nothing will change so much, but i think long term we should be scared from what is coming ! More and more regulations will come and break crypto !
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