What Should Happen to Crypto for Regulators to More Readily Accept It?

Interest in the crypto market from investors, both retail and institutional, has been on the rise since 2020, when digital assets have proven themselves amidst economic turmoil. Since then we have seen major companies from outside the crypto sector invest into these assets, which in turn raised a lot of waves in the financial market. A study by Fidelity Digital Assets showed that around 90% of respondents interested in investing in crypto believed that it is going to happen within the next five years.

Alongside corporate players, we can now see that many countries - from China, Japan, South Korea to the US, the EU and many others - are putting in effort to deal with cryptocurrencies in some way or another. The methods range from taxation to potential ways of adopting CBDCs and stablecoins to boost national economies. 

This shows that governments worldwide have finally acknowledged the benefits that blockchain technology and digital assets can bring to the international financial ecosystem.

But, of course, a transition of such scale cannot happen at the drop of a hat. Regulators everywhere are struggling to put together clear-cut laws for crypto even as they remain wary of this industry. This sometimes causes them to clash with crypto-companies that feel constricted, some of which choose to limit themselves to one or two jurisdictions or forgo dealing with regulation altogether.

Personally, I think that this kind of stance from regulators is understandable - their job is to protect average users from financial losses. And crypto assets are something that many people are still not particularly well-educated about. So the regulators’ concern shouldn’t come as something unexpected. 

At CEX.IO we believe that our users should understand the potential risks when dealing with crypto assets, which is why we seek to advise our clients in any way we can. At the same time, we also strive to build trust with regulators by following all the necessary rules and procedures across all jurisdictions in which we operate, including receiving the temporary registration status with the UK FCA and 48 money transmitter licenses across almost all US states.

We welcome regulation in the crypto industry because choosing otherwise would lead to exclusion from the greater international financial system. Traditional businesses would find it hard to work with companies that are considered “illegitimate”.

Those crypto businesses that understand this point have already been taking steps to follow rules without any coercion from the regulators. And it is those kinds of responsible businesses that I believe will remain in the crypto market long-term, bringing further reliability and trustworthiness to it. 

Another crucial step here is to continue erasing communication barriers between the industry and regulators. By seeking out dialogue between the two parties, both crypto businesses and government representatives can ensure that their concerns will be heard. And then they can cooperate and work through their issues together to reach a better financial tomorrow.