The Future of Regulated Crypto Exchanges
What can we learn from past to see in the future?
Cryptocurrency enthusiasts have already been left out of bitcoin’s historic rally in recent months, thanks to different countries banning and closing domestic exchanges.
Most commonly given argumentation to do this is to prevent the trader’s financial risk. But let’s ask ourselves exactly what kind of financial risk we are talking about. We all know the damage that was done by the stock market crash in 2008, yet stock exchanges are working just fine and are enjoying a good reputation. They represent an opportunity to diversify the portfolio. Buying bitcoin and other cryptocurrencies is the logical next step. We believe that trustworthy exchanges will become more diverse offering new methods of privacy, different safety protocols, ID security infrastructure, metrics, and regulation.
Regulated and licensed crypto exchanges will survive
We believe regulation will be the most important thing that will hit crypto space in 2018. The most progressive governments will implement old and as well new currently in writing securities laws which will set specified standards for all exchanges will sooner or later have to meet. Many will follow Blocktrade.com applying for MTF in Europe, Dodd-Frank in the United States, etc.
Regulated exchanges will set a (high) benchmark for businesses and governments that will enable the framework to properly use blockchain and the whole potential of this technology in their operations. In practice, we are talking about better and more efficient technologies, insurance, and rules that will give investors and banks the security they need. Regulation is also the precondition to bringing institutional money to crypto and position currently niche market side by side with traditional stock exchange markets. And furthermore, we believe that IPOs will give a fair share to tokenized assets which will represent an important part of enabling smaller companies to go public. But more about tokenized assets next time.
The institutions are surely joining in. Like Peter Loop mentioned JPMorgan will open a cryptocurrency trading desk, despite Jamie Dimon’s viral ‘fire in a second’ comments to any JPMorgan trader who was trading bitcoin. When they decide to take the step, we are ready to connect them to Blocktrade.com.
Fear and loathing in crypto
There is always some kind of FUD around cryptocurrencies trading. On the other side, FOMO is strong in it as well – and even more dangerous for people who invest before they do the necessary due diligence for cryptos they are investing in.
Jim Angleton, President of Aegis FinServ Corp (which owns BitcoinBankUS and is a manufacturer of ATM-Kiosks offering CryptoCurrencies for qualified investors) answers the question why there is so much fear around crypto for Forbes.com:
Fear in the cryptocurrency space runs with the wind. Essentially the facts speak for themselves. They can be compromised via selected, targeted Cyber Intrusion leading to a hack with malware or ransomware. In addition, your unregistered (not registered with Blockchain) are safer from hack than Registered. Many complaints filed with CFPB (Consumer Financial Protection Bureau) relate to Consumers indicating their blockchain registered bitcoin, litecoin, dodge coin and others are being hacked. Since there is no insurance or guarantees, investors fear is properly placed as their hard-earned funds could be stolen hours, weeks or months after purchase. Many Cryptocurrencies have not been audited by their regulators (CFPB, IRS, SEC, FTC) and in 2018 they will become examples of financial audits. Many suspect their coin miner or exchanger will be closed or shut down due in part to noncompliance. Fear also is set when Governments have publicly banned their digital currency thus having zero recourse or refund. Buyer beware means more to a Cryptocurrency investor than any other type of public domain investment.
So in short, future of cryptocurrency exchanges is about insurance of funds, custodian banks and regulating cryptocurrency markets at high-stakes, complicated, fast-moving work in progress.
As we see it the future of cryptocurrencies will be regulated by governments and laws.
This will bring ease of use, more security and less stress for new and experienced crypto investors/traders.