The cryoptocurrency industry has been expanding in recent years faster than lawmakers can keep up. Many analysts confirmed that this trend is expected to continue at least in the near future. With this trend, U.S. lawmakers have expressed concerns because the cryoptocurrency sector remains largely unregulated.
According to Rep. Andy Barr, Kentucky Republican, there are more than 1,000 different digital currencies with a market cap of over $250 billion.
The emergency of cryptocurrencies
Cryptocurrencies have been around since 2009. The currencies do not require the backing of a central bank. In the past, their growth and use has been hampered by their association with criminal activities like drug trafficking and money laundering.
In recent months, the industry has made headlines for criminal activities in which billions of dollars have been lost. These include fraud and hacking among others. These isolated incidents have increased calls to have the industry regulated. Many of the policies being developed center around boosting security to protect investors, increasing transparency and mitigating the impact on the domestic economy.
The case of Bitcoin
Last year, Bitcoin went on a wild rise. The industry also recorded the highest growth in recent market history. Bitcoin rose from $1,000 to over $20,000. This was followed by a massive drop in December.
Investors and economist in the mainstream economy found this growth unjustified. The surge was troubling and many regarded it as an extraordinary speculative bubble. In a recent hearing, the House Financial Services subcommittee on monetary policy and trade collected inputs from experts on different matters connected to the sector. Across board, there are worries that the U.S government is yet to come up with the right regulatory framework for the sector.
There has been a lot of debate among investors and economists in the crypto world on regulations matters. This has been a paradox from different circles. The sector needs to be regulated so as to avoid price manipulation and other vices. However, many in the cryptocurrency space have benefited from the absence of regulations. The absence of regulations has contributed to the rapid growth of cryptocurrencies.
Opponents believe that regulation will simply end up de facto centralizing the currency and removing the advantages of anonymity to it, destroying its value.