Relationship between Cryptocurrency Exchange and Regulation 加密货币交易所与政府监管之间的关系
Should cryptocurrency be regulated or not? 加密货币是否应由政府监管？
Unregulated Cryptocurrency Exchange
In 2018, a relatively new exchange was just one of the hundreds of obscure, new cryptocurrencies exchanges that spawned. Yet, the exchange has caught the attention of many, recording daily volumes exceeding $5 billion, in some instances topping prominent exchanges like Binance, Bitfinex, and Bithumb.
On CoinMarketCap, the adjusted market volume of this exchange is more than $1 million whereas the 24-hour market volume is more than $5 billion.
“Many market participants say they suspect these fast-growing exchanges are either offering incentives that encourage users to inflate volumes, or not doing enough to stop abuse on their platforms. One red flag of this exchange: Its reported volume is by far the biggest among 219 platforms tracked by CoinMarketCap.com, despite traffic on its website amounts to a tiny fraction of most peers. “ — Bloomberg
Doubts about the integrity of crypto-markets have deterred some professional institutions and fund managers from investing in cryptocurrencies and prompted regulators to take a closer look at exchanges, potentially building a process to charge these exchanges for flouting securities laws.
U.S. authorities have expressed similar concerns. Bloomberg reported in May that the U.S. Justice Department has opened a criminal probe into suspected illegal practices in crypto markets, including wash trades.
Market participants say quantifying the scale of suspected volume exaggeration is difficult. Even the largest exchange operators can’t be trusted. Automated trading is widely used in traditional markets under regulatory oversight, though it can facilitate manipulation when unmonitored.
“Fake volumes are unfortunately all too common in today’s crypto-exchange ecosystem,” “The industry will mature of course. As it does, more legitimate exchanges will come along and provide enough real, beneficial structural incentives so that people won’t be misled into trading on questionable venues. It will be a healthier marketplace.” — Jim Bai, CEO of EverMarkets Exchange
“Digital tokens are mainly traded on opaque markets, with no regulatory protection for investors,” “There may not be enough active buyers or sellers and consumers may not be able to exit their token investments easily.” — MAS
Relationship between Regulations and Cryptocurrencies
Cryptocurrencies’ prices are known to react in a volatile manner to any regulatory-related news. The impact depends on the specific regulatory category to which the news relates: events related to general bans on cryptocurrencies or to their treatment under securities law have the greatest adverse effect, followed by news on combating money laundering and the financing of terrorism, and on restricting the interoperability of cryptocurrencies with regulated markets. News pointing to the establishment of specific legal frameworks tailored to cryptocurrencies and initial coin offerings coincides with strong market gains.
These results suggest that cryptocurrency markets are still correlated to regulated financial institutions to operate and that these markets are segmented across jurisdictions, bringing cryptocurrencies within reach of national regulation.
Both price volatility and the ideology of decentralized assets have attracted much attention to cryptocurrencies. Many are analyzing the feasibility of decentralised concepts of money and the economics of blockchain technology. Concurrently, many national governments and financial institutions have expressed concerns over cryptocurrency’s bubble-like market behaviour, the widespread proliferation of scams and anonymity which will result in challenges such as anti-money laundering and anti-terrorism funding efforts.
Although many of the concerns raised would also apply to other asset classes and emergent technologies, cryptocurrencies belong to an unique family as it can function without institutional backing and are intrinsically borderless. This raises the question of whether one can expect national regulation to be effective.
The goals of regulating cryptocurrencies are largely similar to those for other financial assets and services and can be classified into three categories: combating the use of funds for illicit activities; protecting consumers and investors against fraud and other abuses, and ensuring the integrity of markets and payment systems and overall financial stability. Another key legal status issue is whether cryptocurrencies are treated as securities — i.e. tradable instruments used to raise funds by representing a promise to pay in the future — and thus come under heightened regulation and oversight.
Announcements regarding potential regulatory actions can have a strong price impact on cryptocurrency markets and set the direction of how the industry would mature and combat its inherent challenges. Regulators seem to have adopted an open minded approach to cryptocurrencies that does not stifle innovation. Although the SEC will increase the number of investigations and enforcement actions, organizations that issue tokens in a compliant manner will thrive and grow. However, regulation may go against the initial ideology of Satoshi Nakamoto when he first invented Bitcoin. Cryptocurrencies are meant to remove governments and central banks out of the equation when it comes to decentralised finance.
***Disclaimer: This content is not financial advice and should not form the basis of any financial investment decisions nor be seen as a recommendation to buy or sell any good or product. Trading cryptocurrency is complex and comes with a high risk of losing money. You should carefully consider whether trading cryptocurrencies is right for you and take the time to learn how trading works and decide how much money you are prepared to risk.
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“不幸的是，在当今的加密交易生态系统中，假货数量太普遍了。”“该行业当然会成熟。这样一来，就会出现更多的合法交易，并提供足够的真实，有益的结构性激励，从而不会使人们被误导在可疑场所进行交易。这将是一个更健康的市场。” — Evergreen加密货币交易所首席执行官,Jim
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