Impact of Government Legislation on the Cryptocurrency Market 

Impact of Government Legislation on the Cryptocurrency Market 


World’s most widely used cryptocurrency, Bitcoin (BTC), experienced price hikes, which attracted the government towards the landscape. The rapid change and high volatility in the crypto value have puzzled economists and analysts, making it challenging to evaluate the prices. Government legislation and policies can be a factor to evaluate the value of the cryptocurrency and has the potential to impact the cryptocurrency marketplace.          

Why are Legislations Significant in the Crypto Market?   

“Government regulation might be a factor to influence the Bitcoin price and active involvement of the government will help further accelerate the value of BTC in the marketplace”, stated Morgan Stanely. Bitcoin made big news in the crypto market as the prices skyrocketed, turning investors into millionaires. A rapid fluctuation in the US financial market attracted regulators to the marketplace. The scenario caught the attention of the Federal Reserve, an American Central Bank, and one of the top financial regulators. The Federal Reserve is well known for regulating banks and also monitors digital assets held by the banks in the US. The Reserve is about to launch Central Bank Digital Currency (CBDC), a crypto version of the dollar. 

The only motive of the launch is to set some criteria to manage the price and value of digital assets in the financial marketplace.     

How the Policies are Impacting the Cryptocurrency Landscape? 

Government legislation has the potential to build or decline the prices of cryptocurrencies. The Federal Reserve is outside the sphere of cryptocurrency and overlaps with the digital asset when it becomes the asset on the balance sheet. Offering financial services and holding a certain percentage of deposits as safe assets is the basic functioning of banks.

The Federal Reserve decided that digital assets must be deposited separately by the banks and should be notified. Also, the banks are urged to consider the challenges of crypto to the asset portfolios.    

Cryptocurrency is extra-national and has a decentralized ledger spread across varied nations and requires well-organized regulation to minimize adverse impacts on the national and global economy.  

The reactions of Japan and China to Cryptocurrency are one of the best examples to understand the difficulties. China has banned the crypto offerings to prevent capital overflow whereas Japan works with cryptocurrencies and is about to develop its currencies. Both actions affected the BTC price.

Also, the Federal Reserve is not the only legislation looking at digital assets as the future of the economy, but many other agencies are also interested in the same. Securities and Exchange Commission (SEC), Commodities Futures Trading Commission (CFTC), and Financial Crimes Enforcement Network (FinCEN) looking for expansion of regulations for crypto shortly. The decision not only boosts the value and effectiveness of digital assets but also encourages high-tech financial infrastructure to make the economy much more competitive.     


The rapid fluctuations in the BTC price attracted the attention of the Federal Reserve Bank and other financial institutions towards the crypto landscape. Government regulations will help in regulating and managing digital assets more efficiently and will add digital transformation to the financial landscape.   

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