Why is crypto called the Wild West of finance is a question that has been posed a lot in the past decade, but every time we see an answer it seems to differ. In this article, we will examine three points or rather topics, that may explain why financial experts call crypto the Wild West of finance.

Thousands of computer programmers have tried to introduce traditional financial products like loans to the blockchain. Furthermore, anybody may lend and borrow cryptocurrency at attractive interest rates without the participation of brokers.

The Wild Wild West

The prospect of generating double-digit percentage rates on deposits in certain digital currencies has lured investors. However, big hacks and frauds have plagued the business this year. As a result, regulators are worried about the possibilities of criminality and consumer damage.

Market analysts believe that without correct laws, there would be no major DeFi expansion. Regulators have already begun to tighten their control on the cryptocurrency industry. With legislation advancing, additional controls will probably be implemented in the future.

Why Is Crypto The Wild West Of Finance?

Money laundering and tax evasion have long been connected with cryptocurrency. While crypto rules are intended to reduce this, it will take time. This is due to the crypto ecosystem’s decentralized structure. In crypto finance, most centralized AML safeguards have failed.

Crypto, regardless of regulatory views, is here to stay. The majority of these cryptocurrency currencies and projects are still in their early stages. Nonetheless, there are no societal benefits. They have cost investors more than they have gained, necessitating the need for controls.

Cryptocurrency Role

Bitcoin and other altcoins are decentralized, unregulated, and self-sufficient. As a result, they are exceedingly tough to manage. They are not governed by central banks or governments in the same way that fiat currencies are. And their value is governed by the straightforward rules of supply and demand.

Currently, transactions and accounts are not connected to real-world identities. This offered a secure and anonymous shelter. Furthermore, the transactions are conducted directly between a willing buyer and a willing seller. This implies that they can’t be halted, limited, frozen, seized, or reversed.

Crypto Regulation

Regulating cryptocurrency is far easier said than done. BTC and Ether account for over half of the $1.2 trillion crypto industry. Both cryptocurrencies are open source. They are neither operated by a corporation nor can they function on a peer-to-peer basis. It means that investors do not need an intermediate exchange.

The whole nature of these technologies is decentralized. So, how do you govern them when there is no centralized organization to do so?

The only thing that is for sure right now is that more countries are agreeing that it has to be regulated. What is unknown, are the details of that regulation. No doubt there are going to be a lot of challenges for regulating crypto in the future, as well as a lot of trial and error on the part of would-be regulators.

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