Natalia Latka, a regulatory affairs and policy expert at Merkle Science, the blockchain analysis firm, points out that the increased focus on the Bitcoin halving could potentially influence future regulatory decisions.
Latka noted that although regulations and regulators’ attitudes remain unchanged, the economic and market influences of halving events might indirectly impact regulatory decisions, particularly concerning market stability and investor safety.
In January, Bitcoin exchange-traded funds (ETFs) were given the green light by the United States Securities and Exchange Commission (SEC). Since then, the price of Bitcoin has dropped by half. This significant decrease in value makes it hard to overlook Bitcoin’s presence during this period of heightened attention. Regulators might consider intervening if Bitcoin experiences more volatility in the future.
Another perspective provided by Latka is that the Bitcoin halving might influence energy consumption. Smaller-scale miners could face pressure to exit the market as rewards for their mining efforts decrease. Consequently, the mining landscape could shift towards larger corporations.
Later on, Latka explains that focusing on PoW (proof-of-work) in this manner might attract scrutiny from regulators regarding its environmental impact, potentially leading to legislation aimed at enhancing sustainability.
In simpler terms, Andrew Balthazor, a lawyer at Holland & Knight, points out that there’s ongoing confusion in US law about Bitcoin and other cryptocurrencies. The Securities and Exchange Commission (SEC) and courts have not provided clear guidelines, leading to what is called “regulation through enforcement.” Essentially, this means that the boundaries of acceptable behavior are set by the actions taken during enforcement.
In simpler terms, Latka expressed that without clear and explicit regulations, businesses may face uncertainty and risk, unsure if their actions adhere to current or future understandings of the law.
Balthazar noted that following regulations can significantly affect companies.
In the UK, the Financial Conduct Authority (FCA) is responsible for overseeing crypto asset regulation. However, their efforts to apply existing rules have left businesses in a state of uncertainty and inefficiency. The rapidly changing regulatory environment necessitates frequent adjustments.
In Europe, regulatory bodies have implemented unique rules for cryptocurrencies, including the MiCA regulation by the European Union. However, according to Latka, more details are required, especially concerning how these new crypto regulations interconnect with current financial laws.
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2024-04-18 18:12