Shine light in the dark places of Crypto
Something has changed in the minds of regulators after the November crash of crypto exchange FTX.
After seeing local stock exchange Atom Asset Management freeze withdrawals following the fiasco, Hong Kong’s finance secretary Paul Chan Mo-po announced that “insiders can no longer pretend they are above regulation or that governments just don’t get it.” The hype turned out to be like all the other financial fads of the past.”
In the same way, Mark Branson from Germany’s largest regulator, BaFin, said we should abandon our current soft-touch approach to crypto, which “just lets the industry develop like an adult playground. We have seen the world self-regulating. It will not work.”
FTX seemed like the straw that broke the camel’s back because officials are fed up with the current state of regulation in the industry. At the same time Paul Chan Mo-po conceded that crypto is “unstoppable,” and Andrew Griffith of the British Treasury mentioned that “we would be foolish to ignore the potential of the underlying technology”.
Regulation should therefore not be used solely to distribute slaps on the wrist. It should foster an environment in which crypto assets can thrive safely and efficiently. Julia Leung, the next head of Hong Kong’s Securities and Futures Commission (SFC), likens proper regulation to a cocoon. “Some say the cocoon limits innovation and development,” she explains, “but like all good regulation, it will help fintech companies and their services to incubate.”
Online CFD trading with cryptocurrencies was directly affected not only by the collapse of FTX, but also by the bankruptcies of major crypto firms earlier this year. Join us for a taste of some of the most current attitudes on the issue.
The Senate hearing
Recently, the US Senate Banking Committee met to discuss the Degree to which the lack of regulation was responsible for the FTX crisis. Senator Elizabeth Warren strongly insisted on the need for new legislation to combat money laundering in the industry. “Crypto doesn’t get a pass to help the world’s worst criminals – no matter how many TV ads they run or how many political contributions they make,” she said.
Senator Cynthia Lummis wanted to make a distinction. “Let’s separate digital assets from corrupt organizations. FTX is a good old fashioned fraud,” she said. However, there was evidence that fraud was more prevalent in the industry. Four witnesses consulted at the hearing suggested that many crypto companies routinely engage in fraudulent activity. Federal Prosecutors had accused FTX CEO Sam Bankman-Fried of defrauding consumers and using their funds to pay off his own debt since 2019.
Ashley Alder, newly in charge of the UK’s Financial Conduct Authority (FCA), took a pragmatic approach to the problem. Crypto platforms are, in Alder’s experience, “deliberately evasive. They are a method by which money laundering occurs in size”. FCAs work is to regulate 50,000 financial services providers in the UK to ensure industry stability and consumer protection. They were given more Powerful on the local crypto space in early December by the UK Treasury. British Prime Minister Rishi Sunak indicated in April this year that he wanted to act for the protection of the industry, saying: “It is my ambition to make the UK a global hub for crypto-asset technology”.
Julia LeungAlder’s successor in her recent role as head of Hong Kong’s SFC, said she was tightening the screws on local trading platforms and stablecoins, and was also trying to eradicate the money laundering in industry.
Spring in the air for online crypto trading?
To mark branson admitted that a “crypto spring” could come when the current downturn ends, but he noted that crypto should be firmly connected to traditional financial institutions. He was also adamant that crypto and e-commerce issues should be handled globally rather than domestically. “We need a global solution,” he insisted.
If you ask Senator Pat Toomey, he will also tell you that regulation could offer hope to the crypto space. “There’s nothing inherently good or bad about software – it’s about what people do with it. Code has committed no crime,” he remarked during the Senate hearing.
Hilary J. Allen from American University was also present at the hearing, and she pointed out that what makes embezzlement possible in the industry is the fact that crypto is “shrouded in opacity, complexity, and mystique.” Clear regulation could remove this stumbling block from the digital asset space by establishing clear rules and establishing transparency.
Allen also says this regulation in the United States was absolutely necessary, if only to preserve the value of crypto assets, which could otherwise depreciate to nothing. In the fast-paced world of online CFD trading, it helps to keep in touch with the larger context behind the crypto space. Keep reading for news on crypto legislation around the world in the weeks ahead.
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