Are Bans The True Solution To Crypto Risks

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Cryptocurrencies have continuously gained attention all over the world and it is certain that it will increase come 2023 with the introduction of Metaverse into more projects and web 3.0. A lot of world leaders, financial experts, policy makers have been talking about regulations, bans and other concepts as steps to protect her citizens. Last year China placed a blanket ban on all things crypto while in Nigeria financial institutions were banned from providing crypto services to its customers. With claims of high energy consumption, high market volatility, illicit and illegal transactions more countries are increasing their restrictions on all things crypto. Countries like Vietnam and Russia prevents the use of cryptocurrencies as payment but have not restricted citizens from trading and investing in cryptocurrencies.

Which ever way we look at it, cryptocurrencies have just as much benefits and potentials and so bans aren't exactly the best way to go as people will continuously find their way around them. It is more beneficial to revamp and update the global regulatory framework governing their activities. There are many ways to go about this like increasing oversight over cryptocurrency services by financial institutions and federal authorities. Rather than ruling the entire space out , a proper understanding by federal and financial institutions might help them understand just how it can adequately protect the public without banning cryptocurrencies. These institutions should tighten monitoring and supervision activities just like they would bank transactions rather than a total ban. Transfers that are more than certain required daily limits should be monitored or require certain legal documents or means of identification before executed. Financial institutions should be able to provide helpful monitoring and risk management as they would other means of investment.

Secondly require projects to be more transparent and increase ways of protecting its investors. By introducing regulations that's mandate projects to be transparent about all their activities, rug pull schemes would have scammed people can easily be pulled out. By increasing the requirements it is more easier to weed real projects from fake ones because dubious projects would find it difficult to be transparent and so back out. For example if every project is required to register with federal authority for proper investigation before launching, more investors will be protected. By publishing these findings in major publications and even social media, more investors are exposed to information that will help them make better financial decisions.

Lastly a collaboration with investors. Constantly painting cryptocurrencies bad won't help the relationship the government or financial institutions have with investors or citizens. Trust must be built as well as understanding about both parties, a blanket ban would not help the relationship but will make citizens doubt them even more. Rather, orientation and a open platform for both parties i.e investors and financial bodies/government to explain their angle will help both sides decide better on which approach would be best for all.