By Robert Dykes (CEO, Caspian)
The brutal “winter of crypto,” where cryptocurrency trading volumes plunged by as much as 85 percent from a January 2018 high, has been enough to dampen the enthusiasm of even the most ardent supporters of disruptive digital assets. However, industry sentiment is that the freeze may have melted, with the green shoots of spring sprouting up and perhaps piquing the interest of sophisticated investors.
Many in the sector agree that greater oversight could be a catalyst for more institutional investors entering crypto, and there is now support for moves to regulate the sector. Recent action by Hong Kong regulator, the Securities and Futures Commission (SFC), to introduce a new regulatory framework for exchanges is an example of moves to tighten up the crypto space. Under the proposed scheme, crypto exchanges will only be able to deal with institutional investors as part of a move to better protect the public. This plan however has received a mixed reception from local industry players, who may be used to less oversight.
But for serious, legitimate market participants regulatory clarity is desirable. Those less scrupulous players, who may be shirking security best practice or puffing up trading volumes, are those that are actively wanting to stay in the dark. The Securities and Exchange Commission itself currently faces a conundrum, with questions about the appropriate level of oversight, understanding that over-regulation could stifle innovation, but not doing enough could put investors at risk of having their digital assets stolen or misappropriated.
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