Open the way for the growth of the crypto market through better regulation


With the continuing supply chain dilemma and the U.S. dollar’s efforts to combat inflation concerns, cryptocurrency remains an attractive port in the current financial turmoil. The first Bitcoin recently approved (Bitcoin) Futures-linked exchange-traded funds (ETFs) traded by asset management companies on the New York Stock Exchange and Nasdaq ProShares and Valkyrie FundA new type of financial instrument was created separately, which caused a sensation in the market. Valkyrie received clear approval from the U.S. Securities and Exchange Commission (SEC), and the ProShares ETF was not opposed at all.

This marks a significant increase in institutional finance’s interest in cryptocurrencies.The scary thing about Coinbase $64 billion NASDAQ direct listing, And large-scale initial public offerings (-IPO) venture capitalists (VC) like Andreessen Horowitz (a16z) have also launched their own Multi-billion dollar funding focused on crypto.

Financial excitement is not limited to the celebrities in the industry.It is reported that crypto-related startups Raised more than $2.6 billion The first quarter of 2021 is more than the full year of 2020.

For cryptocurrency to truly become a serious investment tool that can withstand competition, not just a flash in the pan like the 21st century gold rush or tulip mania, it must obtain long-term institutional financial support as a serious investment choice.

easy to say, hard to do. So, how is encryption done?

related: Why now? The U.S. Securities and Exchange Commission spent eight years authorizing Bitcoin ETFs in the U.S.

Get down from your fence and open the gate

Cryptocurrency has proven that it can generate amazing yields of triple-digit percentages, but these large fluctuations in value will only strengthen its perception of the “wild west” of finance. Cryptocurrency will only become a fully mature investment option when it reaches almost unanimous confidence in its stability and transparency.

Many stakeholders and regulators of the new crypto economy must have expressed some skepticism. As one of the largest regulatory agencies in the United States, SEC Chairman Gary Gensler said that he is still worried about investor protection in the 2.5 trillion dollar crypto asset market.As Gensler himself Say At all market summits on Yahoo Finance last month:

“Investors are not as protected as they are now, whether they enter the stock market or the bond market that we have supervised for so long. Without that, I think it really is, as I said to others, a bit wild west.”

The speculative nature of the market, coupled with inadequate supervision, has created this perception of a dangerous environment. For a certain type of investor, this feeling of excitement and danger is almost welcome-“moon landing” one day, and buying on dips the next day-but this is not the secret to attracting large financial institutions, moreover Needless to say those who manage pension plans or 401(k)s.

The major companies in the crypto industry certainly know this and are already working hard to develop standards so that everyone from major financial institutions to small retail investors is more willing to use crypto as an investment option. In the report submitted to the U.S. Senate Banking Committee, the above a16z Overview Industry regulatory principles include:

Anyone who sees a16z’s report should not get lost. It is not only submitted to government agencies, but also includes solutions that would not be possible without government cooperation. Liberals and crypto anarchists may sneer, but for crypto to fully realize its investment potential, this kind of cooperation between the government, major financial institutions, major crypto institutions, and retail crypto investors is essential.

related: Things to know (and fear) about the new IRS encrypted tax report

Sorry sir, but we have to make some laws

Although Bitcoin was initially considered as a way to circumvent central banks and currency manipulation, the government’s signing (and purchasing) of cryptocurrencies in a regulatory form is still critical to creating global legitimacy and the resulting investment, even if these cryptocurrencies Currency and investment tools themselves are nominally “decentralized.”

It is best for the industry to be proactive in this regard, not only in regulating itself, but also in determining how the federal lawmakers who may not be the most knowledgeable or proficient in cryptocurrencies regulate cryptocurrencies.Currently, the United States is Pass the infrastructure bill This threatens cryptocurrency with vague language and misplaced priorities. Companies such as Coinbase and a16z have worked tirelessly to ensure that crypto (and their own) interests are readjusted in the bill, but a few or even large companies can only do so much. The entire industry needs to work together to accept this regulation, a sound regulation.

related: U.S. infrastructure laws can support digital assets-but some fixes are required first

Although some of the encryption provisions of the Infrastructure Act are terrible, they can actually bring some benefits if they go into effect. These new encryption terms have opened the door for many encryption companies to establish a solid foundation when dealing with banks, rather than being blocked or unable to open accounts. Its unique language also allows for the careful integration of cryptocurrencies with the country’s largest banks, thereby unlocking new investor categories and exponentially increasing market value.

Foreign governments similar to the United States may also provide a blueprint for sound support for cryptocurrency regulation.Canadian Fast, clear but encouraging regulations Encrypted ETF is allowed Almost completely dominated Canada’s fledgling ETF industry.

As the old saying goes, the first step in solving a problem is to recognize its existence. The entire crypto industry needs to recognize the long-term problems inherent in the current lack of regulation and find ways to work with legislators and regulators to protect consumers without diminishing the very strong value proposition that initially attracted investors to crypto.

The views, thoughts and opinions expressed here are only those of the author, and do not necessarily reflect or represent the views and opinions of Cointelegraph.

James Giancotti He is the co-founder and CEO of Oddup, a global entrepreneurial rating platform. Before entering investment banking and research positions at Goldman Sachs and JPMorgan Chase, he started his career in consulting at Deloitte. After ten years of advising high-growth companies, he turned to investors and entrepreneurs. He currently holds the dual roles of CEO of Oddup and Alluva, which is the world’s largest crypto asset analyst market.