Cryptocurrency Regulations and Their Impact on Investor Trust: Layers of Trust
摘要
The legislative processes within the cryptocurrency market, characterized by their tendency to avoid regulations and insufficient regulatory oversight, represent an innovative phenomenon that has emerged in recent years. This development is largely driven by the efforts of various countries and international institutions, whose primary objective is to organize the market, enhance investor trust, and promote its growth to utilize its potential benefits. This chapter briefly reviews and examines some of these initiatives. It suggests that trust in financial markets is influenced by regulatory processes, market characteristics, and investor confidence. These aspects are discussed as key layers of trust within the cryptocurrency market. In addition, the chapter reviews the efforts of international legislative bodies and countries to establish national and international trading hubs to support market development. Furthermore, it emphasizes the essential features of blockchain technology to explain how the market evolves and builds trust, which is vital for its success. Finally, the chapter examines the behavior and expectations of informed investors in building trust in the market. The findings reveal that in the wake of the 2018 cryptocurrency market crisis, not only have legislative bodies aimed to exert effective control and oversight of potential threats and risks but also the ecosystem’s participants have worked to enhance trust and encourage investment flows by updating and refining key foundational concepts in the cryptocurrency market.