Regulatory Scrutiny of Cryptos to Improve Transparency, Filter Out Fraud
Industry players welcome global cryptocurrency regulations, believing rules will benefit the market in the long term.
The crackdown on cryptocurrencies by regulators across the globe is a welcome development because it would encourage transparency in an unregulated market filled with uncertainties and fraudulent activities, according to some analysts and industry participants cited by Reuters.
San Lee of New York-based ICO advisory firm Strategic Coin said:
"We believe that regulation in the ICO [initial coin offering] space will filter out some of the nonsense in the marketplace and is part of the overall maturing of the crypto asset class.”
Regulators in the US, Europe, and Asia are calling for fresh rules and guidelines on cryptocurrency trading as its exponential growth over the past few months has created a regulatory nightmare.
The digital currency market has more or less spiraled out of control. The number of digital tokens had ballooned to more than 1,500 since Bitcoin's launch in 2009. This has jolted the financial industry, especially after Bitcoin rallied and peaked to more than $19,000 in December 2017. But the investment opportunity generated by cryptocurrencies has also attracted criminal elements and sparked fears of a bubble.
The Securities and Exchange Commission (SEC) of the US has initiated a clampdown on digital currencies and ICOs and issued subpoenas to companies that raised money from virtual currencies.
Overstock.com is among those to receive a subpoena from the SEC, with the agency zeroing in on its $250 million tZero ICO. Overstock plans to issue 2.3 million tokens through the ICO.
Last week, the SEC issued a public warning and called on cryptocurrency exchanges to register with the agency if they want to continue or start operating in the country. The SEC said:
“Many platforms refer to themselves as "exchanges," which can give the misimpression to investors that they are regulated or meet the regulatory standards of a national securities exchange.
The regulator noted further:
“Although some of these platforms claim to use strict standards to pick only high-quality digital assets to trade, the SEC does not review these standards or the digital assets that the platforms select, and the so-called standards should not be equated to the listing standards of national securities exchanges.”
G20 to tackle common cryptocurrency rules
Japan has joined the chorus of some G20 voices calling for coordinated regulation of digital currencies to be addressed at the finance ministers summit in Buenos Aires on March 19-20.
The call follows earlier requests by the central bank governors and finance ministers of France and Germany to include virtual currency in the G20 discussion, focusing on its broad implications on a global scale.