There’s no doubt that the crypto market is an inherently volatile space, and one in which individual assets are incredibly vulnerable to sentiment and the machinations of high profile investment.
This has been borne out recently during the crypto bear run, which has been influenced directly by the actions of Tesla CEO Elon Musk.
Make no mistake, Musk’s recent praise and criticism of Bitcoin has correlated with the asset’s dramatic rise and fall through 2021, while its move back above the $40,000 also followed the entrepreneur’s decision to start accepting BTC tokens once again.
In this post, we’ll look at how the recent moves towards regulating crypto have impacted prices, while asking what the future could hold from a regulatory perspective.
Will Crypto be Regulated in the EU?
The threat of regulatory moves has also had a negative impact on the price of BTC and altcoins in the marketplace, with Francois Villeroy de Galhau (the current Governor of the French Central Bank) having recently called upon Europe to introduce a universal regulatory framework for cryptocurrencies.
According to a report unveiled on June 29th, de Galhau suggested that digital currencies are increasingly weakening the international role of the Euro, before calling on member states to standardise regulations and crackdown on the global transfer of crypto assets.
We’ve recently seen similar calls in China and India, with each government citing the belief that the failure to address or regulate the rise of crypto assets could see individual economies lose their grip on their monetary sovereignty.
De Galhau believes that this risk will be particularly prevalent in Europe and the single bloc, where the Euro and the wider Eurozone could ultimately take a seismic blow without regulatory intervention.
The Developing Framework Within the EU
Of course, the EU is currently in the process of negotiating and developing new regulations for crypto assets, following the most recent crypto bull run and Bitcoin’s brief breakout above the $60,000 mark.
This also followed China’s decision to crack down on BTC mining, with the European Commission’s proposed ‘Regulation on Markets in Crypto Assets’ (MiCA) currently going through its initial readings in the Council and the European Parliament.
This legislation will likely form part of the EU’s Digital Finance Strategy, which will directly impact on the operation of the crypto space and similar markets.
Make no mistake; movements in the crypto market will impact CFD traders and forex speculators too, particularly in terms of sentiment and widespread demand.
What Does the Future Hold for Crypto?
Many will argue that regulation in this space is much needed, with the MiCA legislation potentially detailing a clear scope for the issuing of crypto assets and their subsequent exchange.
The provision of clearly-defined rules and regulations could also be positive for crypto assets, as they’ll most likely provide greater assurances to investors while negating the type of uncertainty and speculation that has driven wild price fluctuations of late.
So, while the crypto market has lost more than $1 trillion in value during the last three months or so, the introduction of a regulatory framework could help to stabilise assets and lay the foundations for a more prosperous future.