Are Crypto Currencies in Trouble?
Are Crypto Currencies in Trouble?

Are Crypto Currencies in Trouble?

are crypto currencies in trouble

Cryptocurrencies have evolved from digital toys into trillion-dollar technologies that people hold as investments or buy with. Proponents believe cryptocurrencies can transform how we spend and invest our money; critics, however, claim cryptocurrencies empower criminals and terrorists, cause drastic price swings, and consume immense amounts of electricity.

The crypto sector still struggles with an image problem: Last year, high levels of volatility reduced the value of many cryptocurrencies such as Bitcoin and Ethereum while exchanges closed down or collapsed altogether. Sam Bankman-Fried was recently sentenced to prison for running a $17 billion Ponzi scheme which defrauded customers, while smaller firms folded or shut down altogether leaving investor losses estimated in billions.

As government regulators respond to this uncertainty, they have taken steps to create rules for the crypto sector. The Securities and Exchange Commission has intensified its enforcement against crypto firms and now calls for crypto to be classified as securities similar to stocks.

Classification is crucial, according to experts, because it will set rules for holding, trading, creating and taxing cryptocurrency assets. A one-size-fits-all approach could cause confusion; different currencies have distinct features which require being treated differently.

Due to this uncertainty, some investors are opting out of crypto. This trend is particularly prevalent among larger institutions who wish to wait until regulatory conditions become clearer before participating.

However, for certain investors the risks may still be worth taking. As long as they’re prepared to face and navigate these challenges, cryptos could still provide a solid investment option.

The Motley Fool does not own shares of any stocks mentioned, so please follow him on Twitter (@MotleyFool) for any updates to this article. It was first published July 31, and updated through research conducted through June 30, 2022.

The Motley Fool maintains a disclosure policy which makes clear all investing carries risks, including potential loss of principal. No strategy guarantees success or prevents loss, so always conduct your own research and make your own decisions; The Motley Fool cannot give advice nor endorse any specific investments.

This feature is produced by The Motley Fool’s Research Team to assist our readers in making well-informed investment decisions by offering comprehensive, independent and fact-based research and analysis on companies, markets and trends. While our Research Team may or may not hold long positions in any stocks discussed herein, please note this feature does not represent an exhaustive listing of investments; please click here for our Disclosure Policy for more details.

This column is produced independently of the Wall Street Journal’s editorial department and does not receive compensation from them for this piece. Please see our Terms of Use for more details.

The Wall Street Journal takes privacy very seriously and will never rent or sell your personal data without prior consent from you.