Crypto Regulation To Avert Financial Meltdown

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Crypto Regulation To Avert Financial Meltdown

Oxford Law States The Importance of Crypto Regulation To Avert Financial Meltdown. Cryptocurrencies had already been seeing increased interest from p

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Oxford Law States The Importance of Crypto Regulation To Avert Financial Meltdown.

Cryptocurrencies had already been seeing increased interest from people in the last few years. The ongoing crisis has increased that interest even further. After the Black Thursday event where the crypto market

Bitcoin price

Bitcoin price

crashed, more people are buying in. Bitcoin and other cryptos are cheaper than ever and retail investors are cashing in. This has caused concerns for many global regulators and academicians.

In fact, many people are liquidating their other assets to get into crypto. Amid global chaos where asset prices are falling, this just accelerates the plunge. Academicians who are experts in finance and market behavior have stated that this could lead to a financial meltdown. That is why they have called for quick and comprehensive crypto regulations.

Crypto – Threat or Safe Haven?

The same asset can be a threat to the guardians of the legacy system while act as a safe haven for the common people. The narrative that bitcoin is a safe haven has been gaining ground for the past few years. The recent crash questioned that plunge. However, people are not deterred. They see value in holding a hard form of money whose supply is capped. Moreover, it cannot be manipulated by central institutions like the Fed or governments.

The Oxford University Law Faculty posted a blog of April 17 talking about all of this. The researchers have stated in the post that crypto trading could pose a threat to the legacy financial system. In fact, it could be a systematic threat that could even cause a financial meltdown. As such, they believe that crypto should be regulated as soon as possible.

crypto market

crypto market

Their main cause for concern is the decentralized nature of cryptocurrencies. They don’t rely on a central authority and therefore, the authorities can’t do a thing. So, when the common folk or even sophisticated investors lose trust in the governments, they move to crypto. The researchers back their claim with data. They examined the trading volumes for crypto between January 1 and March 11. This roughly covers the chaos until now.

 

Their findings suggest that crypto markets grew on the backs of the coronavirus fears. During times when the fear subsided, the confidence in traditional financial markets grew instead. This shows a negative correlation between the traditional and crypto markets. However, if price action in both markets is compared, there is a great deal of positive correlation. This begs the question if the researchers are cherry-picking their data.

Crypto Community Reacts

When this news broke out, the crypto community took to Twitter to share their opinions. There was a common opinion that the traditional financial system brought this chaos by its own malpractices. They stated that there are multiple holes in the system and people were no longer falling for it. As a result, they are naturally shifting towards crypto to secure their funds as any sane people would do.Set featured image

However, there is also a common understanding that regulatory clarity will bring in more investors. This will grow the industry as a whole and have a positive impact on the prices.

 

Oxford Law States Crypto Regulation To Avert Financial Meltdown

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