What is the impact of current regulations on the next bull market, and what will the future bull market look like?
What impact will current regulations have on the next bull market and how might the future bull market differ?
The US SEC is currently suing industry heavyweights CZ, Binance, and Coinbase, causing the market to react and reprice regulatory risks. Cryptocurrency KOL CoinNotes analyzes the current regulatory risks and their impact on the industry, and envisions what the next bull market might look like.
What are the risks? The US SEC may consider some tokens as securities, and the cryptocurrency exchanges that trade them must comply with applicable US registration and regulatory requirements. Historically, when this has happened, large exchanges that provide services to US residents have delisted tokens targeted by the SEC. Without delving into the legality, many altcoins are likely securities according to the SEC’s approach, and therefore there is a risk of being delisted from major exchanges. This would mean a decrease in potential buyers and a decrease in the growth potential of these tokens.
What’s worse is that the US Securities and Exchange Commission is now cracking down on exchanges themselves, which are the core infrastructure for millions of people to easily trade cryptocurrencies. People are worried that if these exchanges are banned from entering the US or other countries, or if they collapse completely, the market will suffer serious damage. Finally, there are indications that the US may not be the only country to begin taking more vigorous enforcement action against cryptocurrencies.
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Speculation on the impact of this regulatory uncertainty on the next cycle: 1) As a safe haven, non-security tokens, the SEC may not consider Bitcoin or Ethereum as securities, and these assets may have a relative “regulatory security” premium that other tokens do not. 2) Increasing awareness of the legal implications of cryptographic project design can make teams that can inspire confidence in the regulatory status of their tokens more likely to attract funds from potential buyers. 3) Offshore exchanges and regulatory arbitrage can expect to see more exchanges trying to establish themselves in jurisdictions where the law is not so strict, and perhaps exchanges will also see corresponding diversity. Binance is unlikely to maintain its virtual monopoly position. 4) The paradise for on-chain altcoins is a centralized carrier that regulatory agencies can use to attack altcoins. But there is usually no entity that can be targeted to control everything that happens on the chain.