Is Crypto As Decentralized As We Think?

October 9, 2018

Are cryptocurrencies truly decentralized? The Bank of International Settlement dove for answers and emerged with a controversial one: Blockchain-based money systems may not be as independent as commonly assumed.

Is the BIS study worth considering or is it hollow FUD? Let’s take a look.

BIS Study On Cryptocurrency Decentralization

Study Overview

BIS commissioned a study called Regulating Cryptocurrencies: Assessing Market Reactions. Researchers examined one of crypto’s calling cards: decentralization. Unlike fiat currencies, government regulators don’t control tokens, making them an attractive investment option.

Study Conclusions

BIS concluded:

“Cryptocurrencies are often thought to operate out of the reach of national regulation, but in fact their valuations, transaction volumes and user bases react substantially to news about regulatory actions.”

Specifically, researchers deduced that:

  • Legal news strongly affects the crypto market.
  • Anti-money laundering, terrorism, and interoperability news negatively impacts the crypto market.
  • General government warnings, which aren’t attached to a legal action, appear to “have no effect” on valuation.
  • Widely differing cross-jurisdiction valuations suggest significant market segmentation.

Impact: Important Study or FUD Noise?

Fear, uncertainty, and doubt – the almighty FUD – regularly infests the crypto market. And yes, of course regulatory roadblocks will affect the crypto market. However, lawmakers across the country and around the world are rushing to embrace blockchain and its potential. Wyoming wants to become the crypto capital of the United States; Illinois is experimenting with ways to incorporate crypto. Not to mention the international jurisdictions, like Vanuatu, France, and Belarus.

In other words, and to put it succinctly: Crypto isn’t going to disappear anytime soon. For now, the wise tact remains as it always has been: Research and invest wisely. Keep up with industry news and use the information to best position yourself. And if you need help, we’re here to lend a hand.

Connect With A Cryptocurrency Lawyer

Our team of cryptocurrency lawyers has built invaluable industry relationships, putting us one step ahead of the field. We understand how regulations and existing laws affect blockchain startups and crypto investing. So give us a call today. We’re here to answer your questions and provide solid, profitable, compliant solutions to your fintech challenges.

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