The circulation of money through cryptocurrencies since their inception has taken place without very precise regulation. In fact, the creation of digital money has in its essence the intention to remain apart from the common market and especially from the regulation of the states.

It is for this reason that it is possible to buy cryptocurrencies without identification and, consequently, without much guarantee or insurance of the acquired value.

This situation, however, created what is conventionally called the “Wild West”. This phenomenon comprises indiscriminate and unregulated commercialization, which has caused great losses for investors in recent years.

In order to contain this movement, the EU met on Thursday, June 30th to establish cryptocurrency trading rules.

The logic of trading cryptocurrencies

Globally, it is possible to acquire money in cryptocurrencies with little or no regulation. This means that it is not necessary for the buyer to identify himself and, in many cases, not even the origin of the money.

In the EU, in order to try to contain money laundering, regulations required the minimum proof of the origin of the wealth that made it possible to acquire the amount. 

However, realizing that there is still a movement of lack of control of this market, representatives of EU states met to establish the guidelines of the Crypto Assets Markets (MiCA) law.

The great driver for the establishment of the new rules was undoubtedly the recent sharp drop in the value of cryptocurrencies, which demonstrated the fragility of this market and the vulnerability of investors. Bitcoin, the strongest currency available, is down 70% from its peak in November.

The main cause of the system’s collapse was investor concern about rising interest rates, which proved to be a constant across the world. However, unlike other financial systems protected by the states, the losses were catastrophic due to the lack of well-defined limits in situations of falls.

New rules and contradiction

Faced with the negative results, representatives of EU states met with the intention of establishing control rules for the commercialization of cryptocurrencies. According to the commission, the idea is to prevent investors from being harmed by events beyond their control, such as issues that only concern state policies.

Thus, the rules aim above all to ensure a controlled movement of the values associated with each cryptocurrency.

The measure generated mixed reactions from cryptocurrency operating companies. The negative view is supported by the assertion that, with control measures, it would be practically impossible to make a profit from cryptocurrencies.

Most companies, however, believe that this is a positive measure, capable of guaranteeing secure growth in a bloc of investors with a stable economy.

Regardless of the particular opinion, the measure is in itself controversial because cryptocurrencies were created to be outside the control of state policy. However, recent events prove that this is a two-way street.

This is because, like it or not, political events and government initiatives (or omissions) affect investors directly or indirectly. Often, they influence even if it’s just the mindset of buyers. One way or another, it has been proven that it is probably impossible to create a parallel world for trading in values.

Responsibility and industry fragmentation

Another big issue involving investing in cryptocurrencies concerns the responsibility that companies and even individual buyers and sellers have in relation to cryptocurrencies. Loss or blows are common when talking about buying and selling cryptocurrencies.

The new rules also aim to avoid these claims, creating a safe environment for investing in cryptocurrencies.

In this context, the fragmentation of the sector must also be fought. The “lawless” environment that is the cryptocurrency market allows the practice of varied prices and trades, many of them highly risky. Many traders offer no guarantees and are highly suspicious.

The rules aim to minimize the space that these unsafe agents have in the market. This should occur from the adaptation of companies to the new rules. Again, this is a controversial issue considering the “free market” essence of cryptocurrencies, but still viewed favorably by the community at large.

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