Is the Increased Concern About Possible Regulatory Measures Justified (and What Does It Mean for the Market)?
There’s plenty of concern surrounding the future of the cryptocurrency market in the U.S. amidst criticism of digital assets by President Trump and proposed plans for the Treasury and Secret Service to impose further restrictions on these assets. Of course, these developments are often enough to cause panic in even the most faithful of investors. But is this concern rooted in reality, or is it just another threat that may not truly pose an issue to the crypto market?
The Statement and the Budget Proposal Fueling the Fire
Although the true concerns lie with documents that were released this month, we can trace the initial cause back to a tweet released by the president last year, which read:
“I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity.”
At the time, this was simply a released statement that may or may have not proven problematic in the future. Now, however, we can see that previous statements made by the president and by those within his office who oppose the use of these products. According to his 2021 budget proposal, he would expand the Treasury’s oversight of cryptocurrency through returning the Secret Service to its jurisdiction. The same reasoning is applied to a statement found within the report:
“Technological advancements in recent decades, such as cryptocurrencies and the increasing interconnectedness of the international financial marketplace, have resulted in more complex criminal organizations and revealed stronger links between financial and electronic crimes and the financing of terrorists and rogue state actors.”
Despite the understandable motivation behind the desire to change tactics, there is still a sense of worry among both investors and developers. What does this mean for everyone in the crypto industry?
Will This Plan Come to Fruition?
The good news about this budget proposal and the many statements floating around is that they do not have any substance at the moment. The budget proposal is simply that, a proposal. Whether or not it can be implemented depends on the election results of this year as well as whether or not the House of Representatives and other legal bodies agree with the approval of such a budget as the president cannot enforce it on his own.
What We Can Learn From This Ongoing Situation
The most important thing to understand about news in the crypto industry is the impact it has on the prices of assets. News like the above, especially if it is backed by action and verifiable consequences, can dramatically reduce the price of crypto (much like positive news can boost the price at a moment’s notice). The key takeaway from situations like this is to remember to conduct your own research and determine the true impact of a newsworthy development. Through careful research and a better understanding of the correlation between news and market value, you will be able to see whether or not something is worth worrying about.