As cryptocurrencies continue to recover from the string of market collapses that occurred in 2022, many investors, both institutional and everyday, are now cautiously looking at the opportunity provided by digital assets – but for long-term trust in them, global regulatory standards and measures are needed. This need for trust, along with the assurance of investor protection, was recently addressed at the World Economic Forum, in Davos, Switzerland, and discussed by a panel of high-profile crypto executives during Consensus 2023.
Regulatory Clarity: Protecting Investors and Market Stability
Attendees of the forum in Davos included Dutch Central Bank president Klaas Knot, European Commissioner Mairead McGuinness and CEO of deVere Group, Nigel Green, who all stressed the need for a global regulatory framework surrounding digital assets, in order to protect investors and maintain market stability. As an industry, we can’t afford to skimp on regulation, as many companies learned in 2022,” said Nigel Green.
Meanwhile, at Consensus 2023, executives like Mike Belshe, CEO of BitGo, Guy Hirsch, Managing Director North America at Kraken, John Palmer, President of Cboe Digital and Chris Zuehlke, Global Head of Cumberland DRW, agreed that clever regulation and transparency can benefit the crypto market and industry, and help increase public trust in digital assets. “It’s important for cryptocurrency exchanges and custodians to have regulatory clarity and have customer assets protected,” said Guy Hirsch.
Trust, Liquidity, Custody, Reserves: Crypto Industry’s 2021 Challenges
A number of key issues that were discussed at the Consensus event, included issues of liquidity and prime brokerages, changes to custodial services, and operational requirements for exchanges to demonstrate their reserves.
As the digital assets space continues to evolve, regulation and innovation can work hand in hand and help the industry to become more mature. John Palmer noted that the company’s conservative offerings, which once seemed to be a hindrance to adoption, have now become a staple, with investors increasingly seeking safe, trustworthy means to store their assets.
The panel also highlighted the need to guarantee trust by employing cryptographic methods to verify assets, something which should be more reliable than audits in traditional finance. This suggestion came in response to the crypto industry’s 2021 issues, and its highly challenging conditions, which prompted a dramatic migration of trust from the banking sector to digital assets.
Regulation: Key to Long-Term Crypto Growth and Stability
Though regulation can be seen as a heavy-handed restriction on a free-market, when applied selectively and carefully, it can provide the stability necessary for long-term growth. Ultimately, the combination of responsible investments, smarter regulations and a reduced level of fraud could act as a catalyst in allowing the public to truly embrace digital assets.
By providing investor protection, transparency, and responsible options for entry into crypto markets, regulation has the potential to fundamentally change crypto for the better and lay the groundwork for a secure and prosperous future for the industry.
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.
