According to a report written by Timothy Massad from Harvard University, the cryptocurrency industry is in dire need for regulation. Massad said there is need to act quickly to prevent problems arising from the poor regulatory conditions in the industry.
A Market Open to Fraud
In his report titled, “It’s time to strengthen the regulation of crypto-assets” the former chairman of CFTC who served under the Obama administration spoke about the urgent need to bring regulation to the digital assets market which has been beleagured with hacking and other illicit activities.
Massad claims that the cryptocurrency industry will have trouble thriving if authorities do not combat the problems by bringing regulation to the sector as applied with traditional markets. He highlighted that insecurity of asset and scams are growing issues in the industry, making it less secure for investors.
A market open to fraud due to the absence of standard guidelines according to the report, exposes investors who are left vulnerable due to lack of adequate regulatory protection.
The former CFTC chairman also pointed out that cryptocurrency exchanges operate freely without oversight and sometimes against their clients’ interest.
“Crypto exchanges are not required to have systems to prevent fraud and manipulation, nor are there rules to prevent or minimize conflicts of interest. Crypto exchanges can engage in proprietary trading against their customers, something the New York Stock Exchange cannot do. Regulations to minimize operational risk and ensure system safeguards are needed, just as with securities and derivatives intermediaries.”
The SEC could bring answers
Massad hinted that both the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC) have the capacities to handle the task stating there is no need for the creation of a separate agency for the crypto industry.
Jeremy Allaire, the Circle CEO had in January maintained that the biggest challenge facing the crypto industry is the absence of a clear regulatory guideline from the SEC. He wrote in a Reddit AMA:
“The biggest and most immediate regulatory hurdle we face is the lack of specific guidance from the SEC on how to classify various crypto assets. We believe many are clearly currencies and commodities, and there needs to be more specificity on what are really securities. This can unlock a lot of market activity, and also clearly enable the growth of a market for crypto-based securities.”