In its beginning, the crypto space has been a kind of Wild West where regulation was almost entirely absent. The digital assets and their underlying blockchain technology have built up a wave of innovation, which began to be ridden by more and more enthusiasts who entered this innovative space.
Crypto and the blockchain have the immense power of disrupting the current financial system, among others. These innovations have been creating news models but some models that are also compatible with the traditional system, this way allowing innovation to reach far beyond the realms of our imagination.
All crypto enthusiasts know that the last year as not the best one for crypto, as the market lost a significant chunk of its capital when Bitcoin fell the hardest ever. But more crypto-analysts and experts said that this year should not be seen as a disaster because it made the crypto market more mature and it also separated the valuable projects from the weaker ones.
This year, on the other hand, is expected the be a year in which the crypto space will flourish, and the digital assets will head towards the massive goal of mainstream adoption.
The importance of regulatory compliance in the crypto market
This is a massive focus that the crypto space has, and according to expert opinions such as the one of Changpeng Zhao, Binance’s CEO and more, there are still a few ingredients missing from the mixture that should lead the cryptos to mass adoption. One such ingredient is institutional investment in the crypto space. Zhao believes that when the institutional money starts pouring into the crypto space, we’ll be racing towards the mass adoption of crypto.
But it also should not come as a surprise the fact that institutions will not have the courage or the FOMO (fear of missing out) activated, until they can rely on more certainty, protection, security, and reliability in the crypto space. In other words, regulatory compliance is a must for the crypto market to be able to flourish and go to the next level.
ICO scams and hacks triggered significant setback of the market
Back in 2018, in the first months, there have reportedly been more than 500 new ICOs, but along the ICO meteoric growth, there’s also been a surge in the scams around ICOs as well. Major crypto exchanges have also suffered massive setbacks due to hacks.
These and more unfortunate events have led the U.S. Securities and Exchange Commission (SEC) to issue a statement saying that every crypto exchange has to be registered with the agency. In the EU, crypto exchanges will soon be subject to stricter measures to combat money laundering and terrorist financing, under the 5AMLD.
Regulation can boost innovative technology’s acceptance
Regulation is vital in the crypto space, due to the reasons we’ve detailed above and many more. It’s extremely important that the crypto space understands that good compliance manager will make this new model, this innovative technology more acceptable in the eyes of the regulator.
In a sector with such a strong tech innovation like the blockchain, this is a function that is crucial. It’s true that the blockchain technology aims to make society freer and in control, the traditional idea of preserving identity should not be forgotten. This change should not be focused on disrupting the tradition, but to move towards evolution in a progressive way that blends the old with the new.
Thankfully, compliance professionals are doing everything in their power to trigger enhanced regulation which, in exchange, will make sure that we’ll indeed witness the mass adoption of crypto and massive success of the innovative blockchain technology which penetrates more sectors on the world with each passing day.