The Future of Bitcoin and Crypto in the Face of Increasing Regulations

By Shane Rodgers

After peaking in 2021, the crypto market faced a significant downturn, spurred by several industry meltdowns as well as general economic conditions. Many investors and critics have begun to lose confidence in the crypto market, fearing that prices will not again reach their highs. Although several high-profile failures may seem like setbacks for the crypto industry, it is important to remember the positive changes these obstacles will inspire.

Understanding the volatility of the crypto market

Investors must remember that volatility is the historical norm for the crypto industry — and investing in general. Like all investments, there is a level of uncertainty and risk involved in investing in crypto. Still, investors should not be worried at all about the current volatility in the crypto market. Looking to the future, there seems to be a continuing trend of upward pricing pressure.

There are some advantages to Bitcoin (BTC) and other major cryptocurrencies that have attracted investors. Using BTC as an example, this token has a high market cap and liquidity, meaning the asset can easily be bought and sold on an exchange, and at prices close to its value. Ethereum (ETH) has a similarly high market cap and liquidity, as well as the added benefit of smart contract capabilities, which facilitate smoother and more secure transactions on the blockchain.

Admittedly, much of the discussion surrounding the crypto market in the media is about behind-the-scenes drama, such as the fall of FTX, the struggles of Binance, and ChaseUK banning crypto trading. However, the public outcry surrounding all these high-profile failures will lead to a safer ecosystem for all in the long run. The attention these cases receive will lead to stronger and clearer crypto regulation and investor protections, along with higher due diligence standards, which are all good things.

Taking ChaseUK’s ban on crypto trading as an example, this is a knee-jerk reaction to a problem that doesn’t substantially exist. Although there may be more extreme impacts in the short term, people will begin to realize that these reactions are illogical and abusive.

UK crypto regulation already pending will see major banks return to the table in a way that will support the healthy growth of the crypto industry. At this point, it’s too late in the game for any country or major entity to ban crypto entirely.

Changes in the crypto industry that set the market toward a positive future

Indeed, regulation seems to be the path forward to allow the crypto industry to continue its growth. Regulation will provide a clear framework by which businesses and exchanges in the crypto market can operate. In the short term, these frameworks will be put in place by specific jurisdictions on a country-by-country basis, but eventually, we may be working towards a market where crypto is more uniformly regulated across the world.

One major change we could see integrated into the crypto market that could reinspire confidence is the SEC approval of BTC spot ETFs. By allowing Bitcoin and cryptocurrency assets, more people will be able to invest in the crypto market without having to buy cryptocurrency directly, which could have a profound impact on the ability of the public to participate. The price of Bitcoin and other cryptocurrencies has already seen jumps in anticipation of a crypto ETF approval.

The next step that will prove pivotal for the rebound of the crypto market would be the introduction of payment and banking applications that transform crypto into a viable currency. Although coins such as Bitcoin are currently used as currency — in that they are used as a medium of exchange — cryptocurrency-based transactions still exist on the fringes of the economy.

With these banking and payment apps, consumers will be able to use cryptocurrency to pay for more transactions on a wider scale using crypto.

What crypto must do to rebound

Ultimately, the biggest obstacle the crypto sector faces in reaching its former heights is to rebuild consumers’ trust. The issues that the crypto industry faces right now are largely “image issues,” due to the very public nature of the controversies it has encountered.

However, with the increased regulation and policing of crypto exchanges that these controversies have inspired, as well as the increasingly attendant financial compliance and close monitoring, consumers may be able to gain back some — if not much — of their trust in the crypto market.

The crypto industry and investors have understandably been rattled by some of the price drops and controversies that major players in the market have suffered. That being said, these obstacles have given way to opportunity.

As jurisdictions continue reacting to these events with calls for increased regulation and compliance, there will be more clarity and consistency — especially with regard to crypto exchanges. As such, investors can hopefully look forward to a day when the public can regain their trust in the crypto market.

Author Bio

Shane Rodgers is Chairman & CEO at PDX Global. He has more than 30 years of experience in investment banking, corporate finance, management, and operations in Australia and the United States. Mr. Rodgers served in a wide variety of positions, including as Co-founder and Chairman and CEO of Anglo Arabian Corporation Ltd., an unlisted Australian public investment company from 1980 to 1985; A director at Satco Power Corporation, which he helped take public from 1985 to 1987 Chairman and CEO of the Chancellor Group, Inc., a publicly-traded US oil & gas company, from 1997 to 2001; as a partner and Chairman of Capital General Partners, an Australian boutique corporate advisory firm from 1996 to 1998, and as a Partner in KKR Associates, an Australian investment partnership (unrelated to Kohlberg Kravis Roberts & Co.), from 1993 to 1995.