In August 2017, the Securities and Exchange Commission (SEC) of the United States issued a warning to investors of possible ICO scams. This was followed by suspension of a number of companies for alleged unlawful coin and token trading. Early this month, the SEC issued subpoenas to 80 ICO firms companies, including tZero and TechCrunch’s crypto funds.
Along the same line, the financial regulator in Japan, Financial Services Agency (FSA), suspended the operations of 2 crypto exchanges for a month last Week. FSA also issued business improvement orders to five exchanges, including Coincheck, one of the largest crypto platforms in the country. This is part of FSA’s efforts to safeguard the investments and secure loopholes in the crypto operations that can be potential entries for cyber attacks.
Fulfilled expectations
The crackdown on crypto exchanges may or may not be indicative of imminent regulations from the different governments. However, this has been expected by many in the industry.
Jose Merino, Chairman of SID Limited, says, “To see certain countries cracking down on some crypto exchanges is something widely expected. It’s still fresh on our mind, the $530million loss of wealth on Coincheck so no surprise there that Japan came hard on exchanges.”
However, Merino adds that, “What should be avoided is to generalize the issue and assume that all crypto exchanges have an issue with safeguarding users of crypto, but rather, come hard on the ones that disregard basic security principles.”
Encouraging participation
Having clear regulations in place is an important step in encouraging participation from cryptocurrency exchanges and foster security of blockchain ecosystems. According to CEO of GCOX, Sir Dr Jeffrey Lin, Japan’s crypto regulations have elevated the country globally and made it attractive to investors and crypto experts.
He says, “Setting clear regulations has not only made her a global leader in both finance and technology, it has also attracted international investors, funds and blockchain experts to the country. This further fueled the momentum for Japan to innovate within its growing crypto-ecosystem and create more business opportunities. We firmly believe that these regulations by governments will help foster a more secure blockchain and fintech ecosystem, encouraging licensed cryptocurrency exchanges to enter their local markets.”
On the other hand, cryptocurrency exchanges must comply with the set regulations.
Eugene Liebermann, CEO of CAR token company, says, “Crypto exchanges have no choice but obey, and many more countries will find it profitable to regulate this market. It seems like many powerful people are of interest to drop the market capitalization to jump in this train.”
Article by David Drake
Disclaimer: David Drake is on the advisory board for most of the firms mentioned or quoted in this article.
