Regulation is the need of the hour for the cryptocurrency market. Apart from giving it the needful boost, it will create confidence in the investors. As the cryptocurrency industry matures, investors and executives are seeking more regulatory and legal certainty. Many investors have favored regulation, particularly for initial offerings.
Abu Dhabi’s Financial Services Regulatory Authority (FSRA) chief executive Richard Teng said a lot has changed over the past few months in a changing landscape that forgoes fears associated with cryptocurrencies. He said the growing industry requires guidelines to develop and encourage the sector responsibly.
“We are confident that our comprehensive regime, which we have shared with global regulators like the US, the UK Treasury, Financial Conduct Authority and Bank of England and regulators in Singapore, Hong Kong, and Japan can address these risks and bring greater confidence into this asset class,” said Teng.
In October, the Abu Dhabi Global Market (ADGM) according to CCN, enforced the regulatory framework by the FSRA for cryptocurrency firms. The regulations including stipulations for exchange operators and crypto custody firms deemed cryptocurrencies as commodities similar to precious metals.
The US Embraces Regulation
The United States market has also embraced regulation to bring about much-needed transparency and fairness. According to Harvard Business Review, the cryptocurrency industry is in uncertainty and confusion because of lack of regulators. It stated that “without clear regulations, cryptocurrency innovation in the United States is being stifled. Entrepreneurs sit on the sidelines for fear of innocently running afoul of the law. Investors, meanwhile, hang back because of uncertainty regarding valuations. And the commonweal suffers, as other countries lure innovators away from the United States by creating rules that make their jurisdictions more hospitable to this growing asset class.”
The state of Texas was in the limelight this year as it sought to protect its citizens from deceptive and fraudulent activities in the cryptocurrency space. Foley highlighted that 32 investigators in the period of four weeks established that no promoters were registered to sell securities in Texas. “All but two of the promoters were broadly using websites, social media and online advertising to market in the state, and at least five promoters all but ignored investing risks by guaranteeing returns.” The Director of Enforcement of the Texas State Securities Board Joe Rotunda said the unscrupulous promoters were trying to get as much money as they could and as quickly as they could. But this wasn’t the first of its kind incident in the United States. Regulators across the country have cracked similar cases, bringing the matter of the need for ‘greater regulation’ to the fore. Federal regulators are now taking the necessary steps to regulate various aspects of cryptocurrency activities. Experts say that with many countries and states taking regulatory steps, its necessary to establish what a cryptocurrency is, be it currency, security or commodity. The answer will influence the government to regulate it accordingly.
Benefits for the Cryptocurrency Industry
Regulation will give a well-rounded boost to the cryptocurrency industry. It will promote and enforce standards in the crypto community. Besides clarity, it will officially recognize that the amount of decentralization is an important factor in determining whether a cryptocurrency is security. Moreover, regulation will give the much need lifeline to the cryptocurrency market and stabilize the cryptocurrencies.
