How Regulation Protects Crypto Investors?
The cryptocurrency space is moving fast. New cryptocurrencies are popping up almost every day. The market size of all cryptocurrencies has reached well over $1 trillion USD with no signs of slowing down. This means that more and more people are being exposed to the world of digital currencies. And many are looking to invest in them due to their explosive growth in value over the past year. In order to protect crypto investors, regulators look to regulations to put in place to ensure transparency and security in the crypto markets. This so that investors can feel confident about where they’re putting their money. But you may wonder How Regulation Protects Crypto Investors?
Regulation Keeps Crypto Investors Safe
Cryptocurrency has been all over the news lately, and for good reason. In just a few years, cryptocurrencies have seen huge growth. But as with any investment, there are always those who seek to miss use the new markets for personal gain. That’s why governments around the world are rushing to regulate cryptocurrency exchanges and place rules and restrictions on investors. This protects investors from fraud by making it more difficult for criminals to profit off of people’s investments in crypto. Governments also make sure exchanges follow proper anti-money laundering practices and keep up with Know Your Customer (KYC) regulations. So crypto investors can safely exchange their fiat currency for digital assets without exposing themselves to risk from hackers or thieves.
Regulation is Working, But Not Far Enough
While regulatory efforts have done much to protect crypto investors from risks. They’ve yet to solve some of cryptocurrency’s biggest long-term issues. For example, exchanges are working with authorities to get compliant. But that doesn’t mean they aren’t risky — or even that they don’t remain risky. So while regulation is a good first step toward protecting crypto investors, it isn’t a cure-all.
Regulators Are Acting
The Securities and Exchange Commission (SEC) started taking a harder look at cryptocurrencies in July 2017. In an interview with CNBC, SEC Chairman Jay Clayton described all ICOs as securities because they’re selling an investment. Since then, regulators have begun clamping down on cryptocurrency exchanges, ICOs, and even crypto-related companies that aren’t registered as securities. This type of regulation is designed to protect cryptocurrency investors from scams, fraud, and abuse. While holding accountable those who commit fraud or other illegal activity. And it appears that regulators are continuing to pay close attention to crypto-related activities. For example, in early 2018 SEC chairman Clayton mentioned he worried about over-the-counter (OTC) trading of cryptocurrencies for fear of market manipulation.
What Else Can We Do?
Even in a regulated environment, it’s still up to you as an investor to do your due diligence. While regulations might protect investors from scams, they won’t protect against poor investment decisions. Always make sure that you’re only putting money into crypto assets that you understand and believe in. Even if they pass regulatory muster.
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