Web3 And Crypto Regulations

Web3 And Crypto Regulations

The NFT and crypto markets are in a wild west scenario. With little oversight or regulations, this space is ready to be shaken up. These new technologies are the latest asset classes since stocks and bonds, and with a basic understanding of this technology, it will be difficult for regulators to make sense of it all.

Blockchain technology was created with freedom and sovereignty in mind, those that have gravitated towards Blockchain cringe at the thought of government oversight. With the amount of money that circulates through NFTs and Crypto, it is silly to think governments won’t interfere. 

For the past ten years, investors have made off with millions of dollars of untaxed money. People that were early to invest in Blockchain technology didn’t have to worry about consequences when liquidating their assets. Many investors saw an opportunity to evade taxes and enjoy massive profits. 

The early days of blockchain also allowed bad actors to create projects that had no use-case that backed future success. Investors would get lured in and lose thousands of dollars. This model would persist for years, that is, until the biggest scandal in blockchain history—the FTX Collapse. 

FTX is a crypto exchange that was worth several billion dollars. The world’s largest celebrities endorsed the exchange through commercials and social media. FTXs founder Sam Bankman-Fried was the youngest crypto billionaire and was labeled the king of crypto. Allegedly FTX used investors’ money for other ventures, which dried up the liquidity pool. Investors were shocked that there was no money to process their liquidation requests. 

The FTX scandal sent shockwaves through the crypto and NFT space; prices instantly plummeted, and investors pulled out. Regulators are now on high alert and have a tremendous amount of pressure to deal with what’s going on.  

If the Web3 industry is going to move forward, public trust is going to have to rise. There are so many benefits to using Blockchain technology, but without proper oversight and regulations, it won’t work. Blockchain enthusiasts fear over-regulation. Governments tend to regulate industries out of existence. Investors still want to have that freedom that comes with blockchain technology. It will be interesting to see what happens moving forward. One thing’s for sure: regulation is coming.