MEDIA Protocol And The Future Of Blockchain — Part 7
The team here at MEDIA Protocol are deeply committed to creating a more direct, transparent and secure ecosystem for content creators, publishers, and consumers through the revolutionary application of blockchain technology. In fact, it’s the very revolutionary nature of the technology that really excites us.
We’d like to share our thoughts about blockchain technology and how we see it progressing into the future, hopefully demystifying and clarifying some of the misconceptions that currently exist about blockchain and its applications. We want to help create a common understanding of the technology for everyone’s benefit.
This series of articles aims to explore developments within blockchain technology, the relationship between institutional investors and blockchain, and the move towards regulation within the space. We want to help everyone — the marketeers, the technologists, and the content consumers — understand the potential for this game-changing technology.
Strap in, and welcome to the MEDIA Protocol Future Of Blockchain Series.
Part 7 — The Security Of Regulation
Nobody likes to be told what they can and cannot do. And the crypto world is no different. Few would argue that crypto represents a new future for not only the financial world, but many sectors and industries, who could benefit from tokenization and blockchain technology. However, despite the huge potential benefits and innumerable applications, crypto continues to experience a lot of negative press due to the lack of regulation within the space.
For example, some UK banks have closed accounts associated with crypto-related businesses forcing these fintech companies to look for banking solutions in other jurisdictions where rules have been created for cryptocurrencies. It is in the crypto market’s best interest to attract serious investors willing to purchase large sums of assets. But, if they continue to feel insecure about the safety of their investment, if they feel the risk is too great, they will continue to be unwilling to invest large amounts of money into crypto.
The introduction of regulation within the crypto space will bring the certainty, trust and evolution the space requires, if it is to attract volume.
What Is Regulation?
To better understand why regulation is needed, let’s look into what the concept means in the first place. In essence, regulation refers to a set of rules made by an authority to control the way something is done and the way people behave — as the complete antithesis of the belief upon which crypto was founded, it’s easy to see why there os such resistance to regulation within the space.
Take Forex, for instance. Forex is the world’s biggest financial market, and with it comes some serious regulation. Forex requires all online dealers to be registered and to meet strict financial standards enforced by the National Futures Association (NFA). As things stand, Forex is considered to be more stable and skill-based trading in comparison to crypto trading, which keeps driving potential investors to continue to invest in Forex.
If we look at these two markets comparatively, crypto experiences about $5–6 billion a day in trading volumes, while Forex looks at trading volumes of about $4 trillion daily. Right now, crypto is too small for real institutional money.
Applying regulations to crypto trading will significantly aid in the reduction of the ambiguity encompassing cryptocurrencies, which will help to attract more robust investments and aid developers and technologists to have access to the much-needed funding for continued development and innovation.
Moving Towards Regulation
During the last week of May, two major companies in the crypto space — Coinbase and Circle — made moves that definitely indicate that regulation in the space is imminent. Both began working closely with the Securities and Exchange Commission.
Also, Coinbase, the leading cryptocurrency exchange in the US, announced it would acquire securities dealer Keystone Capital Wednesday, in a bid to become a fully SEC-regulated broker-dealer. Add to the mix the various jurisdictions (Gibraltar, Malta, Liechtenstein) drafting up blockchain legislation, and the work of exchanges like the GBX (LINK TO PART 5), embedding financial industry best practices in due diligence, KYC and AML to provide institutional-grade platforms, and you already have significant steps being taken to provide a more secure crypto trading environment.
Benefits Of Regulation
Strategically implemented regulation will help persuade an increased number of individuals and institutional investors to get involved in crypto. This will doubtless contribute to increased liquidity and trading volumes, as well as ETFs that will help institutions hedge their investments. The market currently represents about $5–6 billion in daily trading volumes, and with regulations in place, it can start building towards being a marketplace of real value.
If the current trend is anything to go by, it’s just a matter of time before crypto gains mainstream mass adoption. The way that cryptocurrencies run is significantly more efficient than current economic practices. Decentralised databases and efficiency make them cost-effective, convenient and quick for consumers. If blockchain is going to have a long and prosperous future, regulation and custody are necessary steps towards helping users feel safer and more secure within the crypto space.
Read All Parts In Our Future Of Blockchain Series
Part 1 — What Is Blockchain?
Part 2 — What Does The Future Hold For Blockchain Technology?
Part 3 — Why Aren’t Tokens Mainstream?
Part 4 — Investing In The Future
Part 5 — Trading Platforms
Part 6 — Custody
Part 7 — The Security Of Regulation (This article above)
Part 8 — How Does Regulation Change The Game? (Coming Soon)
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