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​​Market Distortion Caused by Regulation- Disparity in Token Prices in Centralized vs. Decentralized Exchange

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Stricter virtual currency regulation is a phenomenon spreading across many countries, including the United States and China, and its effects range from the form of exchanges to price trends.

Most notably, price disparities between centralized and decentralized exchanges are particularly noticeable in popular emergent virtual currencies. In regions with stricter virtual currency regulations, such as the U.S. and China, investors primarily use decentralized exchanges. However, as a result of regulatory considerations on the project side, access to decentralized exchanges has been shut down in certain regions, making it more difficult to purchase from decentralized exchanges, and as a result, they are forced to buy tokens from centralized exchanges, making it difficult to compare prices across exchanges.

On the other hand, users in countries with relatively loose regulations of virtual currencies, including Japan and South Korea, are able to purchase tokens directly from decentralized exchanges.

These differences in the regulatory climate have had a significant impact on the prices of some of the most popular virtual currencies, in particular. In areas with strict regulations, limited supply through decentralized exchanges has led to imbalances in supply and demand, causing the prices of popular virtual currencies related to the Metaverse (i.e. $LBM, $APE, DeFi, AI ($SGPT, and others) to surge in centralized exchanges.

Such price disparities are an example of market distortions caused by regulations that may affect the healthy growth of virtual currency markets. The way in which investors and regulators address this issue will be a crucial question that will determine the future direction of virtual currency markets.