Is the lack of regulation doing the decentralized crypto market a disservice?
At any point in time, a regulation is borne out of a necessity to put order to an activity, such as an industry or business that caters to growing market demand. Regulations protect all actors involved in the business cycle, including owners, managers, investors, manufacturers, intermediaries, and most especially the consumers. Accountability counts most within regulatory statutes among initiators who are responsible as to the soundness of the project in all its aspects, be it a product or a service, whose ultimate goal is to improve and sustain a quality of living. Regulations will deter those whose intent is only to profit from deceit and carry appropriate police or legal power to penalize or prosecute those who are found liable. A government or an authority is tasked to carry it out.
Once a fragmented fundamental, a new way of thinking in the Internet emerged with a face – crypto space and blockchain culture. The disruptive force created by these nascent technologies was enough to create for itself an asset class of its own. The blockchain blueprint that bitcoin used to launch the first decentralized digital currency in 2009 was the same platform protocol copy that gave birth to many other independent cryptocurrencies. It was almost like a frenzy that many were enticed as to the different uses tokens and coins and cryptocurrencies have that ICOs began propping up. No regulation whatsoever was there to put things to order as nobody really knows what is happening. Rather than risk people’s wealth to an unknown investment, many countries resorted to banning cryptocurrencies altogether. Others like the US allowed it to flourish as the government and lead authorities watch them mushroom while on the sidelines. The decentralized nature of cryptocurrencies left it to become as untouchable as can be together with the distributed ledger technology it boasts of including being free from censorship, anonymous but traceable transactions, no intermediating parties, secure and immutable records.
After 11 years in existence, many unforeseen problems came to the fore, which would now merit the need for self-regulation or an authoritative rule of law if the asset class would like to keep its integrity intact.
The continued lack of regulation allowed many startups to run away with invested funds in ICOs without keeping their promises. If we cannot run after the ICOs, there must be a regulation that would provide guidelines as to the conduct of the people behind the ICOs.
In all actuality, there were already countries who are initiating their own guidelines for cautious management of the crypto system. the problem is it is so fragmented as regulations from one country differ much from one another. We have not got the right formula yet for a global acceptance, so the status quo remains. Slowly as crypto relationships are developed between countries, appropriate interregional regulations will gather momentum and eventual participating countries will be covered.
Educating retail investors must also be part of regulating the crypto space if they choose to cryptocurrencies as part of their portfolio. Awareness as to the high risks involved, dangers of illegitimate ICOs, and product failures should be part of the regulation, not to mention the inherent failure of government systems. The continued lack of regulation allows for unscrupulous ICOs to thrive and adversely affect the operations of legitimate ones.