Why increased regulatory scrutiny bodes well for crypto in 2021

Written by Du Jun Co-Founder, Huobi Group

Is there anyone today who doesn’t have a view on crypto?

Everyone from Gen Z to pensioners is asking for tips on Bitcoin, Ethereum, and other altcoins. Driven by FOMO — or fear of missing out — financial institutions previously seen to have reservations about embracing crypto have reversed their stances. JP Morgan recently made six crypto funds open to its wealth management clients, while Goldman Sachs joined forces with the leading crypto trading firm Galaxy Digital.

Also onboard the crypto train are the big tech firms. Amazon looks set to follow Facebook with its cryptocurrency, Microsoft is now accepting Bitcoin payments and PayPal has just made it possible to buy, hold and sell crypto in the UK, in addition to the US.

🔹Rising regulator interest is good for the long run

But the biggest takeaway from 2021 so far is that crypto has become mainstream and it’s here to stay. All of this recent activity has, however, stirred regulators to act with serious intent. Their actions, in our view, are likely to be the biggest factor in shaping crypto markets in the long run.

Major markets like China and the UK have clamped down on crypto trading activities to limit exposure to traders, while others are embracing crypto in selective areas. Payment is one area where progressive measures will be more common, with Canada approving mortgage payments in crypto and Ukraine legalizing crypto payments, among many others.

For investors, the situation is highly fluid as many regulators, like the Monetary Authority of Singapore, have mandated that all crypto exchanges be licensed. This should help protect investors, but it may also shut out a lot of competition.

Hong Kong currently operates a progressive “opt-in” policy for licensing exchanges, but this could soon change with pending government proposals that may restrict trading to professional ...

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