The points that usually recur concern whether crypto should be legitimate, stable, safe and centralised, as opposed to being global, volatile and anonymous
The late 2010s and early 2020s have been absolutely fantastic for crypto. The market has grown exponentially, becoming the third-biggest trading market, right after forex (first) and stocks (second). Not only that, but the general public is more willing to embrace it, and is more knowledgeable of cryptocurrency.
Of course, this popular acceptance of the crypto market has led to a pretty big debate; should crypto be regulated? There is a lot of talk about this particular topic, so it is worth exploring both sides. By the end, anyone should be able to make their own conclusion.
The ‘legitimation’ argument
One of the primary reasons that the pro-regulation camp brings up is that regulating crypto would lead to legitimization of crypto. Basically, the market would be more widely embraced, and a lot more businesses would be operating with crypto as a legitimate payment method.
Already, there are a lot of businesses that accept crypto. The wider online casino industry, for example, has by-and-large embraced different currencies. Take a look at these South African Crypto Casinos, and you will see that Bitcoin is one of the most popular transactions options available.
Proponents argue that, by regulating crypto, it will become even more popular. On the other hand, detractors are completely against the idea. Most believe that crypto does not need legitimization by any central authority, and coins would become more popular no matter what, as more and more people look for alternatives to fiat (normal) money.
The ‘consumers’ argument
A point of disagreement a lot of crypto fans have regarding regulation is the “consumer” argument. One side believes that regulating crypto would result in a safer crypto market. It would certainly lead to an increase in fraud protection.
Crypto fraud is not as common as it once was. But, there are still quite a lot of noteworthy crypto scams, “pump and dump” operations, and more. Those who are in favour of regulation argue that these scams would be eliminated, or at least greatly reduced if the market was regulated.
Proponents against regulation dismiss these beliefs as coddling. Many might say that these pump and dump scams and fraudulent offers serve as “filters” to prevent any unserious people from trading crypto. Others believe that the best way to fight these scams is to work together and oppose them.
The ‘stability’ argument
There is no denying that the crypto market is one of the most unstable and volatile trading markets in the world. The price of Bitcoin has fluctuated greatly, even in the past few months. If we go back to 2009, we would see a history of ups and downs that is incomparable to any other trading asset.
Consider that this is Bitcoin, the biggest and most sustainable of all the cryptocurrencies. If that is unstable, then what chance do the others have? Those who argue in favour of regulatory measures always bring up this point, saying that regulation would improve crypto’s stability.
Many of the anti-regulation people have not brought up a lot of good arguments against this one. The big one is that some find volatility to be challenging, and they enjoy said challenge. However, there is no doubt that reducing volatility would make crypto a lot more accessible.
The ‘decentralisation’ argument
One of the core principles on which cryptocurrency is founded is the lack of centralised currency. Bitcoin, Ethereum, Tether, and all the Bitcoin halves, soft and hard forks may be difficult to follow, but their goal is to prevent any central authority figure from being involved in finances.
Regulating all of these aspects of the market would, almost certainly, bring an end to decentralisation, and turn “cryptocurrency,” into just another digital coin, no different to the US dollar, Japanese Yen, or the EU’s Euro. In other words, it would give central authority figures power over a decentralised market.
The regulation proponents don’t really have a response to this argument. In fact, most do support centralising crypto, as they believe it would create a safer market. But, most fans of cryptocurrency like the freedom that a decentralised market gives them.
The ‘Privacy’ Argument
Whenever crypto transactions are being brought up, the first thing most people talk about is the fact that crypto payments are safe and anonymous. Indeed, crypto is one of the most private ways to do business online. If it were regulated, that anonymity and privacy would simply erode.
Sure, the risk of scams and fraud would decrease. But, only because any transaction would be traced, analysed and monitored. In other words, it would be just like making payments with a credit or debit card. Everyone would know what a person is buying and when.
Proponents of regulation have argued many times that it is better to give up privacy than online safety. However, the anti-regulation crowd simply disagrees with that premise. At the end of the day, crypto was based on ideals of privacy, anonymity, and decentralisation. So, taking away privacy is counterintuitive to fans of crypto.
The ‘global’ argument
As things stand right now, cryptocurrency is a global market. Not only is it possible to access digital currency from anywhere in the world, but there is no difference between said currency. Bitcoin is Bitcoin, and the fact doesn’t change whether you are in the US, Mexico, Ukraine, Russia, Japan or Kenya.
However, if governments were to begin regulating the crypto market, not all of them would agree on the same regulation. This would create regulatory arbitrage, meaning that different businesses move to places with laxer rules and laws. This would lead to uneven enforcement of said laws, and therefore an uneven industry.
Not only that, but inconsistent regulatory measures could fracture the market. Meaning, Bitcoin would no longer just be Bitcoin, but US Bitcoin, UK Bitcoin, Kenya Bitcoin, etc. This would, undoubtedly, lead to difficulties when making international transactions and stifle innovation.
Things to consider
The crypto market is built on principles of libertarianism, brought up by Friedrich Hayek. Most of the original fans of crypto were people who assign to these philosophies, and would never be in favour of centralisation. On the other hand, the newcomers are mostly just looking for an alternative to mainstream trading, so they are indifferent to the philosophy and politics behind crypto. They just want a safer market.