Stricter Regulation Will Boost Cryptocurrencies By Tackling ‘Ungodly’ Activity, Financial Law Professor Says
- The regulations will boost crypto by eliminating “ungodly” criminal activity, a law professor said.
- Emilios Avgouleas, however, said tougher rules could hurt crypto prices in the short term.
- China is among the states cracking down on bitcoin, while the US SEC is taking a keen interest in it.
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Stricter cryptocurrency regulation will benefit the industry in the long run by tackling “ungodly” criminal activity and making digital tokens more legitimate, a financial law professor said.
Yet regulations can affect the value of cryptocurrencies such as bitcoin in the short term, Professor Emilios Avgouleas, chair of international banking law at the University of Edinburgh, told Insider.
“In the short term, regulation can be a bad thing, as market prices will go down,” Avgouleas said. “But at the same time, the regulations will eliminate ungodly activity and make these alternative payment methods even more acceptable to the mainstream user.”
He said he believed “in the long run this will make the shift from government money to digital payment methods permanent.”
Avgouleas, who is also a senior researcher at crypto technology company IOHK, also said central banks’ plans to create their own digital currencies should legitimize cryptocurrencies in the eyes of consumers.
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Regulators around the world are increasingly paying attention to cryptocurrencies, which exploded in the first few months of 2021 before plummeting in May and June.
China has already started cracking down on bitcoin mining and payments. In the United States, the new chairman of the SEC, Gary Gensler, has repeatedly expressed his thoughts on the loopholes in the rules covering crypto.
Internationally, the world’s largest banking regulator has said that financial institutions holding bitcoin or crypto should follow strict rules to ensure their exposure does not cause financial instability.
Avgouleas said regulatory efforts should make cryptocurrencies more reputable and make it harder for criminals to use them. He said people want to know that they are dealing with something that is “ethical and not used by the Mafia”. The regulations will solve this, he added.
The recent regulatory crackdown in China has hit bitcoin hard, however, contributing to its fall from $ 65,000 in April to mid-June. Chinese authorities have warned banks against facilitating bitcoin payments, which is a potentially significant barrier to global adoption.
Some doubt that cryptocurrencies, which are often much slower than traditional digital payments, will ever be widely used for transactions. New York University professor Nouriel Roubini said the Flintstones “have a better monetary system than bitcoin”.
Still, Avgouleas said he is optimistic about the prospects for cryptocurrencies, believing that they could become widely used around the world because they are private, secure and international.
Avgouleas doesn’t know which cryptocurrencies might become the most popular in the future. But he said the billions of dollars that have been invested in the crypto world would likely mean that “what isn’t fast and scalable today will be tomorrow.”