#Hi, Dear Crypto Lover steemit fams
Do you know why the crypto market needs to be regulated? if not, please read the following and give your comment.
While a ban on private cryptocurrencies will kill all future innovations in the crypto space, virtual currencies do need a regulatory framework to protect the interest of investors.
Finance Minister Nirmala Sitharaman recently said that the government is going to take a calibrated position on cryptocurrency. The minister also said the government wants to ensure that there is a window for experiments in the cryptocurrency space. But the cryptocurrency platforms or exchanges in India are fearing a complete ban on trading. The new bill, moved by the government, is likely to propose a framework for digital currency to be issued by the Reserve Bank of India.
While a ban on private cryptocurrencies will kill all future innovations in the crypto space, virtual currencies do need a regulatory framework to protect the interest of investors. So what should be a regulatory framework for cryptocurrencies, and why is a need for regulations. Let's look at the five major areas that need attention.
Also read: 'Don't want to join every party in town': Rakesh Jhunjhunwala backs Bitcoin ban
Classification of cryptocurrencies as digital tokens and tradeable assets
There is a need for clear classification of cryptocurrency in India. These virtual currencies are not a legal tender backed by the central government or the RBI. The Indian crypto players are also asking for treating crypto assets as financial assets like debt, equity or a commodity.
Regulations for investor protection
Like any other financial asset, the value of virtual assets is also prone to market manipulation and price volatility. In the last few years, the prices of crypto assets have seen wide fluctuations. Take, for instance, the price of Bitcoin fell to $47K last month but again climbed up to $57K in March. There are also chances of mis-spelling the crypto assets as investor awareness is very low. There is a need for disclosure of underlying assets, their performance, adoption, the future potential, and risks associated with virtual currencies.