Why Regulation Is the Best Thing for Crypto

When we hear about holders of crypto being tracked down by the Internal Revenue Service, or that imprisonment is being considered for anyone using crypto in India, it conjures up a disconcerting image of what regulation might entail.

If crypto is the future and there are valid concerns, then surely these should be addressed.

If we want crypto to be accepted and become part of our everyday lives, then we need to engage in the debate and embrace reasonable and responsible regulation.

Even the most devout supporters, who wish nothing more than to see crypto succeed on a mass scale, could agree that the growth of this industry depends, in part, on the establishment of safe, fair and reliable market conditions.

The second document published by the FCA proposes rules to ban the sale of crypto derivatives to retail investors on account of them being less-equipped in their ability to assess the risks of these types of complex, often volatile financial products.

Firstly, the U.K.'s overall approach is not all that different from other jurisdictions, such as, say, Singapore, Hong Kong or even the United States, where special attention is given to crypto assets that have the characteristics of securities - i.e., tokens that constitute equity, debt or are part of a collective investment scheme.

Secondly, the documents provide fairly clear guidance with regard to the regulatory status of crypto assets, as they aim to strike a balance between leaving the field open for financial innovation while ensuring retail investor protection.

Increased involvement in the industry from traditional market participants in finance, like Goldman Sachs, JPMorgan Chase and Fidelity Digital Assets Services, can only add further impetus to this debate - especially considering the recent findings of a Fidelity Investments survey, which revealed that unclear regulation is among the major obstacles deterring institutional investors from adding crypto to their portfolio.

At our own exchange, AAX, our matching engine is powered by LSEG Technology, which is part of London Stock Exchange Group.

About the author Peter Lin is the founder and CEO of AAX, the first digital asset exchange to be powered by LSEG Technology, which is part of London Stock Exchange Group.