The cryptocurrency market is currently trying to change its “Wild West” image that it received as a result of the 2017 ICO boom, the extreme market volatility, and the numerous cyberattacks on investors and exchanges. However, it appears that there is majority support among the world’s biggest cryptocurrency exchanges that the best means to repair crypto’s damaged reputation is to institute government regulation.
A study comparing responses from 24 cryptocurrency exchanges across the globe with daily trading volumes of over $100 million reveals overwhelming support for government oversight for cryptocurrency exchanges. The study questioned the participating exchanges on a number of topics ranging from customer anonymity to perceived threats for the future of the market. Finextra has listed the key findings:
• 88% of crypto exchanges want regulation
• 17% of crypto exchanges believe overly strict regulation is the biggest threat to the cryptocurrency
• 30% say the biggest threat to the market is a significant crypto crash
• 40% say reducing barriers to funding crypto activity by banks will improve acceptance
• 55% say crypto users should be subject to Know Your Customer & Anti-Money Laundering checks like those using traditional financial services”
“The industry is crying out for regulation and the response from partners has shown this,” says Gabrielius Bilkštys, business manager at Mistertango. “Uncertainty is the biggest fear, and regulation is critical to provide the stability we need. Unfortunately, there is no regulatory consensus – worldwide or otherwise. For cryptocurrencies to move towards the scale and ubiquity possessed by fiat currency, it needs cohesive, considered and comprehensive regulation. Thus, regulation will be a catalyst, not an inhibitor to the crypto market’s development.”
These sentiments have been echoed numerous times by lawmakers and heads of financial institutions worldwide over recent weeks. Last week, Korean lawmakers called for an urgent push for cryptocurrency exchange regulation stating,
“While crypto markets have seen rapid growth, such trading platforms don’t seem to be well-enough prepared in terms of security. We’re trying to legislate the most urgent and important things first, aiming for money-laundering prevention and investor protection. The bill should be passed as soon as possible.”
Then on July 30, dissenting SEC Commissioner Hester Peirce, aka ‘Crypto Mom’, published a public letter to the SEC following the denial of the Winklevoss Bitcoin ETF application stating,
“I am concerned that the Commission’s approach undermines investor protection by precluding greater institutionalization of the bitcoin market. More institutional participation would ameliorate many of the Commission’s concerns with the bitcoin market that underlie its disapproval order. More generally, the Commission’s interpretation and application of the statutory standard sends a strong signal that innovation is unwelcome in our markets, a signal that may have effects far beyond the fate of bitcoin ETPs.”
The new survey along with the growing support among government officials worldwide is in many ways acting to dispel the myth that cryptocurrency is best served without any government oversight. Perhaps government protection of investors from poorly securitized exchanges is both a necessary and good thing. This sort of government oversight doesn’t seem to do anything to threaten the decentralized nature of cryptocurrencies themselves, which is arguably what’s most important.
Finextra closes the last section of its article with a quote from CEO of CEX.IO Oleksandr Lutskevych,
“Until now, the industry has not had its say on regulation. It has been widely supposed that crypto companies want to avoid a regulated environment, but this is far from the truth. The industry is all too aware that regulation will lead to the maturity of the market and ensure businesses remain free from suspicion of involvement with illegitimate uses of cryptocurrency.”
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