Regulators are starting to take a closer look at Bitcoin and the cryptocurrency market in general. This is happening all around the world. For example, in China, regulators banned ICOs from starting up in China. This actually caused a major drop in the prices of most cryptocurrencies. Another regulation that led to a price decrease happened several years prior, when Chinese regulators banned banks and payment companies from dealing with cryptocurrencies.
According to cryptocurrency expert Ian King, while these regulations may cause some of the prices to drop, they are necessary. The ICO industry is sort of like the Wild West. An ICO, or Initial Coin Offering, is when you can get tokens for a coin that is going to launch, similar to an IPO. There are many people who are investing in ICOs. Some celebrities have been called on to endorse certain coins.
Regulators in the United States announced that ICOs will be subject to the same rules as regular securities. They will be subject to the laws that prevent Ponzi schemes. The Securities and Exchange Commission used the Howey Test to determine whether or not cryptocurrencies can fit the definition of securities and found that they could. It is true, however, that the Securities and Exchange Commission in the United States has taken a much more lenient approach than the government in China.
Is this good or bad for cryptocurrency investors? While it may lead to prices dropping from time to time, we have seen that the price usually rebounds not long after. Ian King says that we should welcome regulations. There are many reasons why they would benefit investors. They would help weed out schemers and scammers who are looking to scam people out of their hard earned money. That makes the cryptocurrency market a much safer one to invest in. It will also lead to more experienced investors dipping their toes into the cryptocurrency industry, as they will no longer look upon it as some Wild West industry.
When the price of Bitcoin goes down, Ian King says, you may actually want to take the opportunity to buy some more so that you can profit on the rebound.
Ian King is a known expert on cryptocurrencies. He writes for Banyan Hill Publishing and Investopedia on the subject. He has two decades of investing experience.
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