Currently, regulators worldwide are still looking for the best way to regulate the $900-billion industry. Meanwhile, on the 22nd of June, Euronews stated that:
“While some state have partially regulated the sector, others have left the sector without regulations.”
Swiss Watchdog, FINMA, Calls For Complete Regulation Of Crypto Market
Various officials warned that not regulating the sector could affect the financial system of a country. Additionally, many believe that the crypto industry is very risky.
As a result, they do not advise their citizens to invest their funds in the sector. An example was the issue between Fidelity and the US Congress concerning crypto investment.
According to Urban Angehrn, Chief executive of FINMA (Financial Market Supervisory Authority), they can make regulations to protect the rights of investors.
While speaking at a meeting in Zurich, Angehrn noted that:
“It appears that most digital assets trading is similar to the 1928 US stock market. There were various kinds of pump, dump, and abuse in the sector. Currently, it appears that this has increased greatly.”
Also, the FINMA executive urged other regulatory agencies to consider integrating technology into regulation. Angehrn believes that tech would allow for the management of large data.
Furthermore, it will make protecting investors from investing in abusive markets easier. His clamor comes during the ongoing crypto market crisis and issues with crypto firms.
Crisis In The Crypto Industry
As of November 2021, the total market cap of the cryptocurrency industry was over $3 trillion. However, the figure has dropped recently. Currently, it is about $900 billion due to the recent crisis in the crypto market.
The flagship currency, Bitcoin, which has the largest valuation, has dipped below $20,000. The last time Bitcoin traded below $20,000 was in December 2020.
This year, the losses in the crypto market have reached about 60%. Also, increased interest rates and high inflation has affected even higher-risk assets.
Recently, there have been various problems in the crypto market. One of them is the insolvency issues with Celsius and other platforms. Another scenario is the Terra USD fall, which led to the loss of huge funds.
Several investors who had bought the stablecoin lost everything when USD lost its peg. The impact of the collapse was so enormous that it spread across the stablecoin ecosystem.
Due to the incident, several government officials worldwide have called for sound regulation. Some officials l believe the widespread adoption of crypto is the main reason why it needs regulation. This would help to protect the funds and rights of investors.