Analysts say regulations are good for cryptocurrencies

Spread the love

A slew of regulations announced this week is promising for bitcoin and other cryptocurrencies, according to Fundstrat Global Advisors LLC.
Developments such as the U.K. Financial Conduct Authority banning the sale of crypto derivatives and the U.S. Department of Justice issuing an enforcement framework are beneficial in the long term since they will help reduce nefarious activity in the industry, according to a report by David Grider, Tom Lee and Ken Xuan.
They cited regulators “cleaning up bad actors” as also helping. The market’s focus on news that Square Inc. bought Bitcoin and Bitcoin’s ability to push past $11,000 indicate that crypto can power through such things, the report said.
“Actions unsurprisingly indicate U.S. and global regulators are committed to stomping out illicit activity, securities violations, money laundering, price manipulation, and noncompliance with banking regulations,” the strategists wrote. “On balance, we view recent news as a positive for crypto markets, despite select smaller pockets of risk, and we believe the prevailing bull market trend is intact.”
Bitcoin has surged above $11,000 after a long defense of the $10,000 level in early September. Crypto investors were also cheered by Square Inc.’s purchase of $50 million in Bitcoin in a bet by Chief Executive Officer Jack Dorsey that it will be an instrument of financial empowerment.
In other developments, the founders of crypto trading giant BitMEX resigned their executive roles after being charged by U.S. authorities. Cybersecurity pioneer John McAfee, who had been promoting cryptos, was arrested in Spain on U.S. tax-evasion charges.
Fundstrat cautioned that some areas within cryptocurrencies might be vulnerable given the growing regulations.
“We do see select crypto market segments as more exposed to regulatory risks than others and are worth watching closely,” with projects in decentralized finance coming under pressure for a lack of know-your-customer or KYC and anti-money-laundering protocols, the strategists wrote.
“We see offshore quasi equity exchange tokens as an area of risk that investors may be underappreciating as some have had a history of compliance allegations,” they said, and “see further risks with crypto tokens exclusively listed on offshore exchanges where stricter U.S. investor prohibitions could limit liquidity and demand.”

Leave a Reply

Your email address will not be published.