The cryptocurrency arena is not new to controversy after several successful & attempted hacks since the technology was invented. Major cases like the Mt. Gox hacking back in 2014 changed how the crypto markets were viewed by potential investors. At the moment, cryptocurrencies are linked to high volatility, scamming probabilities & hackers whom might as well steal directly from platforms & digital wallets. Business insider has reported that the rampant loss of funds within the crypto space necessitates the formation of overseeing bodies to regulate crypto coins. However, unlike the current centralized systems, this approach will nature regulators from crypto players themselves given their competitive edge in understanding the technology.
During the first half of 2018 alone, over $670 million worth of crypto funds were lost as a result of hacking. While the suggestions seem viable & necessary, it remains uncertain whether such moves will lure large institutions to invest in crypto coins. Existing Self-Crypto Regulators Globally Most cryptocurrency savvy jurisdictions are considering the avenues self-regulation might open or close in the crypto arena. This follows a silent treatment towards these digital assets by most regulators & governments up to date. A good number of influential crypto players have said that this would probably be a convenient move for cryptocurrencies going forward. In Japan, over 15 crypto coin exchanges that have a government sanction joined forces to form a regulatory body. Japan’s Virtual Currency Exchange Association (JVCEA) was formed following the hacking of over $530 million from the Coincheck platform earlier in 2018. Another popular country to make such a move is the United Kingdom. Back in February, the country’s crypto players collaborated & formed CryptoUK to act as their governing body. This body ensures that the sector is protected financially & in other business aspects while keeping the blockchain & crypto innovators in check.
India’s crypto traders are also overseen by Blockchain & Cryptocurrency Committee (BAAC) which acts as a self-regulator subsidiary of India’s Internet & Mobile Association. Is Self-Regulation in Crypto Effective? A Research done on crypto executives’ position about self-regulation show that majority support the move. According to the findings of a Foley & Lardner LLP law firm, over 80% of the interviewed leaders concurred with formation of self-regulatory bodies in cryptocurrency. One of the executives said that; “There are plenty of ways to work with regulators and legislatures to develop commonsense cryptocurrency laws and regulations. ”Other significant figures that share the same sentiments include KeyoCoin CEO, Matt Baer. In his opinion, self-regulatory bodies are instrumental for shaping the regulation of cryptocurrencies; “There is always a risk that a knee-jerk reaction [on the part of regulators] will lead to unnecessarily draconian measures, and this is where self-regulatory organizations come into their own, providing input and guidance to shape, rather than prevent, regulation. ”Inasmuch as self-regulation may be a big move for the crypto markets, the bigger question remains on its effectiveness so far & in the future. A good example is the Zalf hacking, a Japan-based crypto exchange whose challenge led to JVCEA issuing an order for system security checks by all its members.
As it stands, the members whom have tried to comply with these directives do not exceed three. The body however plans on narrowing down to the unresponsive experts on whom action will be taken. In summary, the invention of self-regulatory entities within the crypto markets might not be as effective as the SEC effect but certainly improves the industry’s prospects. Crypto investors will reduce their skeptical nature which they mostly attribute to regulation while large institutions may also opt to test the waters in digital assets. News sources have speculated a large institutional crypto effect once the Bitcoin Exchange Traded Funds are approved.
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