Rise of Stablecoins and EU Calls for Tracable Transfers Leads to Massive Price Drops

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One of the most notable features of Bitcoin and cryptocurrencies so far have been the non-traceable transfers. Transactions on the blockchain are recorded and can be viewed by users, but they are not trackable outside of that bubble. The same goes for stablecoins – the whole cryptocurrency network is built on it.

That’s why people love crypto casinos so much. With no governments or organizations controlling them, players don’t have to share their details online when making a transaction. That might be coming to an end as the EU, Asia, and the USA have called for tighter control on cryptos and stablecoins.

This has caused a massive price drop for Bitcoin that erased the 2021 gains and dropped below $30,000 once again.

Regulatory Headwinds are a Headache for Bitcoin

On Tuesday, the European Commission said that all companies that hold virtual assets such as Bitcoin must be subject to money-laundering rules. At the same time, the EU also asked for transparency requirements for crypto asset transfers as part of a wider crackdown on cryptocurrencies.

In the midst of all that, Bitcoin has dropped under the $30K mark, and altcoins have suffered drops over 5% as well. Under the newly proposed guidelines, a financial institution that deals in Bitcoins will now be required to include the name, address, account number, and date of birth of its clients. Anonymous crypto transfers will be outlawed, going against the nature of cryptos in general.

Of course, this hasn’t been made law just yet. According to experts, it could be years before the proposals become law. However, it’s important because it shows that the EU is not willing to accept cryptocurrencies as they come. They’re pushing hard for money-laundering checks on cryptos under the guise of terrorist-financing risks, and there’s a great chance that such proposals become law in the future.

Stablecoins Affected Too

The proposal wasn’t focused on Bitcoin only. It affects stablecoins too, which are currently operating with no regulator framework. That could change soon since they are being adopted pretty fast. For those unaware, stablecoins are digital currencies pegged to currencies such as the US Dollar. They have great potential to become useful payment methods. Of course, more regulation is required in order to protect stablecoin users and the financial system in general.

The USA is acting quickly to push such regulatory frameworks for stablecoins. They are seen as potentially a better option than Bitcoin, which has suffered some hard times recently. The wild price swings are getting too much to bear for some users, yet interest in cryptocurrencies has never been higher.

Experts believe that regulation will eventually overwhelm Bitcoin. The EU has repeatedly said that it will regulate Bitcoin if the risks associated with it are not tackled. Stablecoins are another story, but the EU and USA are pushing for regulation of the full crypto market.

It’s still years off for now, but it’s a strong indicator that the world is still not ready for Bitcoin and cryptos.

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July 21, 2021: • No Comments

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