Timothy Massad has called for regulation of the Cryptocurrency sector. The former United States Commodity Futures Trading Commission (CFTC) chair, in an articled authored by Harvard University and published by the Brookings Institutions, blamed lack of regulation on the increased use of Cryptocurrencies in illicit activities.
Massad, who was the chairman during President Obama’s presidency also noted that regulation would go a long way in protecting the investors, reducing cyberattacks, and enhancing the popularity of Cryptocurrencies.
Need To Protect Investors
Timothy Massad, the former CFTC chairman, has said that the Cryptocurrency sector will remain unsafe without regulation. Massad noted that investors in the securities and derivatives segments feel secure due to the traditional market standards imposed there. However, when it comes to the Cryptocurrency sector, there are no such regulations. Consequently, this exposes the investors in the industry to fraud and other risks.
In the report, Massad also talked about a lack of oversight on Cryptocurrency trading platforms. He noted the lack of regulation of Cryptocurrency exchanges has given room to conflicts of interest, market manipulation, and fraud which lead to operational risk. He said that all these challenges can be addressed by having clear regulations in place.
When comparing New York Stock Exchange with Cryptocurrency exchanges, Massad noted that the latter could engage in many dangerous activities that expose investors to many risks. For instance, he said that Cryptocurrency trading platforms don’t have systems to prevent manipulation and fraud. There are also regulations that would help in addressing conflicts of interest.
Massad Claims Bitcoin Has Failed To Provide Trust
When Bitcoin, the world’s first Cryptocurrency came into existence about a decade ago, it promised to bring trust that lacked in the traditional financial system. Nevertheless, the invention has been received differently in different countries. Whereas countries such as China have banned Cryptocurrencies, South Korea, Switzerland, and Japan are among those that have opted to regulate the sector. Consequently, it has become a challenge for the virtual currencies to achieve their goal but have instead created “regulatory distraction” according to the former CFTC Chairman.
Massad added that there is no accountability in the Crypto sector due to lack of regulation. Consequently, this has made the big banks remain the preferred option for most people. Massad called upon the U.S. Congress to ensure that the right rules are put in place to address these challenges. Proper regulation will make Cryptocurrencies acceptable and help in preventing their use in illicit activities.
Winklevoss Twins Support For Cryptocurrency Regulation
Massad is not the only person who believes that Cryptocurrency regulation is good for the sector. Renowned Cryptocurrency investors, Winklevoss twins also hold a similar opinion. Through their Crypto trading platform, Gemini, the two have been calling for the regulation of the industry. The two believe self-generated and self-policed regulation will help in making the Crypto sector more attractive to institutional investors than it is today.
However, some people still believe that the Crypto sector is better without regulations. Some community members think that regulating the industry will make it impossible for the Cryptocurrencies to achieve their original promise of being alternative to central bank issued fiat currencies. Furthermore, some believe that increased regulation in the Crypto sector will make it similar to the traditional financial markets.