Why Increasing Regulation Could Actually Benefit Bitcoin | ETF Trends

One of the early positives for Bitcoin and other digital assets was that digital currencies are not as relegated as traditional financial assets.

Now, some market observers believe more oversight of the crypto universe could lead to wider adoption, stoking higher prices for digital assets in the process.

See also: Forget Bitcoin. This Nasdaq Blockchain ETF Is Soaring

“Investors have watched crypto assets like Bitcoin, Ethereum, and Ripple hit both dizzying highs and extreme lows over the past few years. Despite the volatility, some investors may feel they’ve missed out: Bitcoin alone appreciated over 1,000% in the last twelve months and over 11,000% in the last five years. The possibility of such returns explains why, today, one in four U.S. investors has exposure to crypto assets, according to a recent survey,” write Oscar Shine and Mitchell Nobel for Barron’s.

Some Tough Regulatory Questions

Bitcoin, the largest digital currency by market value, is on a torrid pace this year, prompting some investors to rue missing out on its incredible run. Amid low global interest rates and central bank debasement of fiat currencies, Bitcoin is becoming a go-to asset for some high-level investors and companies.

GBTC 1 Year Performance

“One concern for investors has been the lack of regulatory oversight. To remedy that, regulators must answer key questions: How should crypto assets be classified, and which government actors can best provide supervision? As regulators have puzzled through these issues, many in the crypto community showed active hostility to oversight, fearing it would undermine the decentralized ethos that attracted early crypto investors,” according to the Barron’s op-ed.

Now, regulators are increasing scrutiny of digital assets.

“Now, the era of unregulated crypto appears to be ending. Regulators are focused on the crypto markets, and investors should expect increasing oversight. This is good news: Regulators appear to recognize the unique characteristics of crypto assets and the need to balance innovation and investor protection,” concludes Barron’s.

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.