Why Increased Regulation of the Crypto Space is Important – Opinionbr>
The crypto world used to be a kind of “Wild West” where regulation was scarce, if not completely absent. Ultimately, combining this lack of institutional oversight with the cryptocurrency industry’s staggering level of growth in recent years led to some problems.
Let’s look at ICO’s as an example. In the first few months of 2018 alone, there have been 544 new ICOs, representing over $3 billion in funds raised. However, along with ICO’s meteoric growth, there has also been a rise in coverage surrounding ICO scams, as well as a number of cryptocurrency exchanges that have suffered major setbacks due to hacks.
Ultimately, I believe all of the recent announcements regarding increased regulation and oversight is necessary in protecting against illegitimate companies, scammy ICOs, and suspicious cryptocurrency exchanges. While these announcements may have caused a recent decline in a number of digital currencies’ values in the short term, I believe that the increased regulation announced recently will ultimately work in the consumer’s best interest in the long term. Let’s look at a few reasons why.
Recently, the U.S. Securities and Exchange Commission (SEC) issued a statement declaring that every cryptocurrency exchange must be registered with the agency. “The SEC staff has concerns that many online trading platforms appear to investors as SEC-registered and regulated marketplaces when they are not. Many platforms refer to themselves as exchanges, which can give the misimpression to investors that they are regulated or meet the regulatory standards of a national securities exchange,” the SEC said, which ultimately provided context as to why additional layers of oversight in the cryptocurrency space is necessary for consumer protection.
With that said, it should be noted that regulating a field that was once known notoriously for its lack of regulation is undeniably nuanced territory. That’s why I believe that Chairman of the U.S. Commodity Futures Trading Commission (CFTC) J. Christopher Giancarlo’s “do no harm approach” to regulating the crypto world is the correct one. As Giancarlo stated himself: “I believe that ‘do no harm’ is the right overarching approach for distributed ledger technology…With the proper balance of sound policy, regulatory oversight and private sector innovation, new technologies will allow American markets to evolve in responsible ways and continue to grow our economy and increase prosperity.”
Online advertising moguls, such as Facebook and Google, have also taken measures to protect consumers from illegitimate ICOs and scams by banning all ICO and cryptocurrency ads. These bans were put into place to ultimately help consumers safely navigate the web without being bombarded by ads promoting quick scams. With Twitter joining this movement as well, the need for increased regulation becomes more apparent. And while there are many crypto companies who do not agree with this move, I applaud the efforts being made. I believe that these consumer protection measures will help weed out fake advertisements from fly-by-night companies, as well as illegitimate ICOs and scams. This will enable consumers in the space to more easily navigate through legitimate companies without the noise or confusion of unscrupulous companies.
While cryptocurrency was originally developed as a way to circumnavigate large institutional bodies such as banks and the government, its popularity is growing at a rate where regulation becomes necessary. Protection of assets is of utmost importance to investors, and these proactive safeguards ensure just that.