A World in Need of Crypto Regulation to Prevent Financial Meltdown

TALLINN, Estonia - May 4, 2020 - PRLog -- Massive worldwide panic due to the COVID-19 pandemic has led to a bizarre phenomenon of people repeatedly moving assets and exchanging them into crypto as a form of safe haven in response to the global financial crisis market crashes, to the point where the academic world has actually made a study about it, detailing the good and the bad effects of such situations.

Based on a recent and very informative post from the Oxford University of Law (https://www.law.ox.ac.uk/business-law-blog/blog/2020/04/how-market-cryptocurrencies-affected-coronavirus-and-why-should-we), researchers fear that crypto-related transactions may, be it directly or indirectly, pose a threat to the traditional finance system which must be avoided at all cost as they advise world economic leaders to impose stricter regulations in times of crisis such as these to prevent systemic risk to a potential financial meltdown.

The said study specifically examined all cryptocurrency trade volumes between the 1st of January up until the 11th of March this year. What they found out was that the top 100 cryptocurrencies actually increased significantly along with the number of reported COVID-19 cases. Crazy coincidence?! Well, the correlation reversed though when everyone else started responding well towards traditional financial markets the more positive it got.

This occurrence can simply be explained in that due to the decentralization of crypto transactions, not having to rely on any central authority is not always in the best interest of the economy as a whole since investors tend to move their capital into crypto when they lose their trust in governments and banks in order to secure their funds, thereby taking away the only lifeline the country has to get back on its feet.

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