Friday, March 24, 2023

Crypto-Linked Bank Fuels Regulation Debate – Usky News

London: The global cryptocurrency industry It has been slammed with setbacks, scams and high-profile failures in recent months to protect consumers from fraud and scams.
was rocked by global finance collapse of silicon valley bank Last week, and the digital currency sector was hit hard by the demise of US crypto lenders Silvergate and Signature – just months after the bankruptcy of troubled crypto exchange trading platform FTX.
Regulators increasingly eager to oversee a sector that was booming during the 2000s covid pandemic When many people were stuck at home.
global crypto market 1 trillion and has grown rapidly in recent months, although it remains well below its 2021 peak of $3 trillion.
“The number of crypto customers grew during the Covid lockdown,” Martin Walker, head of banking at the Dutch-based Center for Evidence-Based Management, told AFP.
“They got involved in an unregulated market, investing with great risk, but not realizing that they were unregulated and not (always) legal,” said Walker, who organized the London Conference of Cryptocurrency Critics last year. Investing in property.”
He argued that the trading platforms were conflicted by their unique status.
“They have a conflict of interest (…) because the owners are at the same time taking risk positions in crypto and selling these assets to their consumers,” Walker said.
“People don’t realize that’s not allowed in traditional finance.”
Regulators also want oversight of such platforms as they engage customers regardless of experience or knowledge with the complex world of cryptocurrency.
Ludovic Desmedt, an economics professor at Bourgogne University, told AFP that such trading platforms “are the perfect solution to a very technologically complex world between a population that is untrained and not very well-informed, both in terms of finance and technology.” are hard”.
Adding to the picture, cryptocurrencies can experience volatile price swings and their value is not determined through transparent markets – as is the case with traditional currencies, stocks or commodities.
As a result, illegal transactions using cryptocurrencies doubled from the previous year to nearly $21 billion last year, according to specialist crypto firm Chainalysis.
However, this estimate does not include some illegal uses such as drug trafficking,
In the United States, authorities are working on a framework to oversee crypto firms, but in September the White House asked regulators to use the same regulatory rules that apply to other financial service providers.
As a result, the Securities and Exchange Commission (SEC) market regulator took legal action against crypto lenders Genesis and Gemini.
And in February, the SEC ordered crypto firm Paxos Trust to stop issuing the dollar-pegged cryptocurrency BSD, a stablecoin for the world’s largest trading platform Binance.
The EU draft law, which is set to take effect next year, will force crypto platforms to be more stringent and transparent in their operations.
In Britain, the government launched a consultation this year to set up a regulatory framework for the sector as it seeks to avoid falling behind the EU and the United States.


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