It seems every country is clambering to figure out the best way to regulate cryptocurrency right now. No matter how widespread cryptocurrency investing becomes, crypto can’t reach its potential as a global market without proper regulation. Coinfloor, a UK-based bitcoin trading platform that was launched in 2013, approached the FCA in hopes of gaining regulatory oversight from the financial watchdog but was rebuffed by the agency. The People’s Bank of China has run trials of its own prototype cryptocurrency, taking it a step closer to being the first major central bank to issue digital money. China’s vision, however, seems to be based more on taking full control of such transactions in contrast to the libertarian aspirations of Bitcoin. But will excessive regulation stifle innovation?
Many felt that the cryptocurrency market of 2017 was the “Wild West.” The markets were hyper volatile and unregulated; this led to the ultimate bear market we saw from the tail end of 2017 into April of 2018. Nonetheless, investments and token markets are on the rise again. While the space is oftentimes described as unregulated this is highly inaccurate. Regulators like the SEC, FCA, CFTC etc have all weighed in on the cryptocurrency landscape and have either made official decrees, like when the CFTC deemed Bitcoin a commodity or like the SEC who have been signaling that all ICO tokens are securities for the purposes of regulation. We have also seen the regulators act on behalf of those who have been openly defrauded or companies who are raising money and acting fraudulently in the use of proceeds. In mid-January of 2018, the Commodity Futures Trading Commission (CFTC) announcedannounced it was charging a small virtual currency trading advice firm called CabbageTech with fraud. The SEC also charged the Founders of Cetra, a late 2017 ICO, with fraud alleging they raised $30m with no real intention on using it to build a company.
Without regulation, it is very difficult for the cryptocurrency market to mature to its fullest potential. In America, the Securities and Exchange Commission governs securities regulation and has recently, through the comments of its Chairman Jay Clayton, seemed to invite ICO’s to file with the Commission as securities. While the ICO market has had its’ growing pains due to lack of regulation, most financial regulatory bodies around the globe agree that it is time to put regulation in place to protect everyone from the bad actors lurking to take advantage of those under educated investors in the space.
For more information on Crytpocurreny regulation, check out our other articles and discover how the Praetorian Group’s PAX token was the very first in history to file an S-1 with the SEC.