Why increased regulatory scrutiny bodes well for crypto in 2021

Written by Du Jun Co-Founder, Huobi Group

Is there anyone today who doesn’t have a view on crypto?

Everyone from Gen Z to pensioners is asking for tips on Bitcoin, Ethereum, and other altcoins. Driven by FOMO — or fear of missing out — financial institutions previously seen to have reservations about embracing crypto have reversed their stances. JP Morgan recently made six crypto funds open to its wealth management clients, while Goldman Sachs joined forces with the leading crypto trading firm Galaxy Digital.

Also onboard the crypto train are the big tech firms. Amazon looks set to follow Facebook with its cryptocurrency, Microsoft is now accepting Bitcoin payments and PayPal has just made it possible to buy, hold and sell crypto in the UK, in addition to the US.

🔹Rising regulator interest is good for the long run

But the biggest takeaway from 2021 so far is that crypto has become mainstream and it’s here to stay. All of this recent activity has, however, stirred regulators to act with serious intent. Their actions, in our view, are likely to be the biggest factor in shaping crypto markets in the long run.

Major markets like China and the UK have clamped down on crypto trading activities to limit exposure to traders, while others are embracing crypto in selective areas. Payment is one area where progressive measures will be more common, with Canada approving mortgage payments in crypto and Ukraine legalizing crypto payments, among many others.

For investors, the situation is highly fluid as many regulators, like the Monetary Authority of Singapore, have mandated that all crypto exchanges be licensed. This should help protect investors, but it may also shut out a lot of competition.

Hong Kong currently operates a progressive “opt-in” policy for licensing exchanges, but this could soon change with pending government proposals that may restrict trading to professional investors. Singapore, on the other hand, is openly accepting retail trading of crypto. In the US, the landscape is constantly evolving with regulatory proposals to stop cryptocurrency crime and tax evasion, but there is also growing potential for investment vehicles like crypto ETFs and other funds.

At Huobi Global, we believe that the growing regulatory activity and mainstream appeal of crypto are proof that it is taking its rightful place in the global financial system. We expect the year ahead to be a constant state of push and pull. But the more that regulators become involved, the faster we will see the market mature, and this will spur genuine, broad-based adoption.

🔹The tip of the iceberg on cybersecurity

Among the biggest factors driving heightened regulator attention are investor protection and safety. Protecting investors is a key part of building trust and confidence in a market, but ensuring the integrity and security of trading platforms and crypto infrastructure won’t be easy. It is all too evident that cybersecurity threats will only escalate, as hackers tend to go where the money flows.

The record US$600 million hack of Poly Network was just a sign of things to come. While the bulk of the money was returned and the heist was carried out ostensibly to highlight a security flaw, it points to potential for future incidents where more malevolent actors, such as professional cybercriminals and state-sponsored threats, could inflict even greater damage.

At Huobi Global, we have built our infrastructure on systems and processes that meet and exceed global standards, but this investment doesn’t stop there. Security and risk management are ongoing priorities that demand continual investment to ensure user safety.

For an asset class and a market that is still maturing, standards for security and risk management can help to promote growth and stability, in addition to protecting investors. Similar to those of other financial instruments, regulations for cryptocurrencies can also spur market development if they are clear and enforced consistently and fairly across the board.

Huobi Global adopts a progressive and open stance towards regulation. As an exchange, we are committed to adhering to industry standards and strive to avoid any potential gray areas. Our goal is to operate in compliance with the rules and regulations of the jurisdictions we operate in. This aligns with our mission to provide a unique trading environment that is truly customer-first, safe, and sustainable.

If we are to empower financial freedom and create new global wealth, the trust that we must gain from investors and regulators will be critical foundations. These are dynamic times, but make no mistake, these are good times for crypto.

🔷Make sure to follow @DujunX on Twitter and 👏clap this article 50x to help share it to the crypto community.👏

Thanks for reading!

Source: https://medium.com/huobi-global/why-increased-regulatory-scrutiny-bodes-well-for-crypto-in-2021-4dbd11baab2a?source=rss——-8—————–cryptocurrency