- Crypto regulations have become tighter in the US.
- The US banking regulators issue warning strike
- How would this affect the crypto space?
The United States banking industry regulator recently put out a warning to banks to view cryptocurrencies as emerging risks, and that approaches to crypto should be taken with caution and to ensure to seek permission in cases when they are in direct contact with a cryptocurrency or a crypto company.
The warning strike was made as a result of the lack of consistency and the volatility that goes along with the crypto space, which also goes along with their many firms that also offer bank-related services and products with the use of cryptocurrency and tokenized assets, which were a significant cause of concern.
The harsh reality of the crypto market almost throughout 2022 has made it even more important for there to be regulations regarding the crypto market to ensure that banks are safe, and while it is an excellent move on the path of the banking regulators in the United States, this could affect the crypto space negatively as the US is usually seen as one of the major hot spots for cryptocurrency, if there are more cases of warning strikes on the crypto market, it’ll scare away investors or people with interests in the crypto market.
How Could This Affect The Crypto Standing in The US?
Generally, the crypto market has been shaky for most of the year, so its standing in global markets was already down. With central lawmakers believing it was the end of the crypto market, the audience for cryptocurrency and digital assets was already at a dangerous peak. Still, with a US regulatory authority issuing a warning to banks about crypto, it makes it even harder.
Banking firms like Goldman Sachs in the UK have already expressed their interest in investing and delving even further into crypto. The chances of investment banking firms in the US now doing the same may have dwindled just by this warning strike. It’s, however, not a shocking prospect as the market has been getting suspicious of how much money has gone missing from hacks, companies filing for bankruptcy, and the FTX collapse.
The FTX crash increased the need for regulated crypto companies that are easy to trust or regulations to protect companies or banking forms. It also opened the need for big banks to pick up the cryptocurrency business and go into the blockchain market. Still, the US banking regulations asking people to be cautious and protect their assets will put people and firms from going into business.
FTX’s filing for chapter 11 bankruptcy set the digital assets market far back and had a drastic impact on the trust investors, or investment firms had for the market, as the company was viewed with eyes of respect. At the same time, FTX did a lot of damage. It does not diminish how far the crypto market has come so far.
What Advantages Can The Warning Strike Offer?
The one advantage of a warning strike would be the caution that crypto firms will run their companies with, as they would not want to be viewed with eyes of suspicion. They would be vying for investments, especially with the bearish market, they need to have the attention of the investment markets, so the regulation may help ground them.
The United States being one of the major hotspots for cryptocurrencies makes the need for regulations even more important. If there is ever any country that needs to ensure that crypto is controlled correctly, the United States is one of them.
Conclusion
The new regulations and warning strikes may not affect the crypto market. They may serve as a source of caution for the market and also help in stabilizing the chaos and help investment banks do their due research before investing in any crypto companies, or it could end up crippling the crypto industry in the United States as most investment companies may now be too scared to invest in the wrong companies which may put even the legit companies in general scrutiny. Still, even that is to be expected as if a big company like FTX could crash, what protections are there for other companies, which was the push the US banking regulators had to make the warning strikes?
The regulators noted that the collapse of FTX was a significant trigger for the regulatory rules that were made. The OCC asked that people approach the crypto space carefully.
