Just this week, Ether (ETH) breached the $4,000 mark while Bitcoin (BTC), the world’s most popular cryptocurrency, recently hit another all-time high at over $63,000. Meanwhile, Dogecoin (DOGE) continues its roller-coaster ride after “Dogefather” Elon Musk’s appearance on Saturday Night Live and news about digital artwork fetching eye-watering prices in the form of nonfungible tokens is all over the airwaves.
Crypto is hot, whether you like it or not.
Still, not everyone is convinced. Janet Yellen, the newly-minted United States secretary of the treasury, previously questioned the legitimacy and stability of cryptocurrency as a store of value. After all, it was only three years ago when we saw the last Bitcoin bubble burst. After a meteoric rise in 2017, which saw BTC crest the $20,000 mark, a 2018 sell-off cratered the asset and attracted “Tulipmania” comparisons.
Related: Did Bitcoin prove itself to be a reliable store of value in 2020? Experts answer
Bitcoiners have been called “cultists” due to their zealous backing of this new, volatile and arcane technology. But don’t be confused: it’s not just technophiles and eccentric billionaires like Elon Musk diving into cryptocurrency. From JPMorgan to PayPal, bona fide Wall Street bluebloods and Silicon Valley stalwarts have been buying Bitcoin in a big way.
Related: Will PayPal’s crypto integration bring crypto to the masses? Experts answer
The amount of BTC in circulation is now worth over a trillion dollars. Most of the major financial institutions — including investment giants and payment firms — are now backing the cryptocurrency, and there is growing interest from retail investors. Bitcoin is becoming an increasingly important part of the global financial system.
At the same time, Bitcoin still exists in a regulatory gray area as different governing bodies have knit together a patchwork of cryptocurrency rules over the past 10 years. In many cases, this patchwork isn’t enough to give mainstream investors confidence in the market, as some of the most basic principles about cryptocurrency governance are still up for debate. For example, are cryptocurrencies considered assets or securities? Well, that all depends on who you ask…
What do investors need to know about crypto regulations?
One of the big misconceptions about Bitcoin — and cryptocurrencies in general — is that the market is some sort of “Wild West”: outside the scope of regulators and rife with scammers, outlaws and crooks. That’s simply not true.
Any business that touches consumers in the U.S. and other jurisdictions is subject to some form of regulatory standards and rules, which also apply to digital assets. There may not be a framework created with cryptocurrencies in mind, given that we are at the frontier of a new, disruptive technology. But various rules regarding consumer protection, prevention of money laundering, anti-fraud and other fields apply to the different activities that take place. Crypto…