New Study Shows 88% of Crypto Exchanges Want Regulation
Lithuania-based crypto-payment company Mistertango has released a study revealing that 88% of cryptocurrency exchanges would support industry regulation. The study surveyed 24 crypto exchanges internationally with a total daily trading volume of $100 million or greater on a number of issues pertaining to the relationship between cryptocurrency and existing financial institutions.
Perhaps the main driver in the overwhelming call for regulation was a fear of instability in the market, as the study also found that about a third of exchanges claimed to fear a potential market collapse and the accompanying “sudden devaluation of assets.” Regulation, in theory, could lend stability to the volatile market conditions that could lead to a crash.
Comments made by Mistertango Business Manager Gabrielius Bilkštys seem to support this notion:
“The industry is crying out for regulation, and the response from partners has shown this. Uncertainty is the biggest fear, and regulation is critical to provide the stability we need. Unfortunately, there is no regulatory consensus–worldwide or otherwise.”
However, it should be noted that regulation, or even the threat of it, can cause increased volatility, as is often the case when an Asian country mulls a crypto ban.
Bilkštys also noted that there is a large discrepancy between the exchanges in the form that regulation should take:
“For cryptocurrencies to move towards the scale and ubiquity possessed by fiat currency, it needs cohesive, considered and comprehensive regulation. Thus, regulation will be a catalyst, not an inhibitor to the crypto market development.”
The exchanges were likewise split down the middle when it how the regulation should be implemented: 40% said reducing barriers to funding crypto activity will improve general acceptance of cryptocurrency, and 55% said crypto users should be subject to the same Know Your Customer (KYC) and Anti-Money Laundering checks that they would be if using other financial services.
However, despite the overwhelming support for regulation of some kind, 17% believed the biggest threat to cryptocurrency overall is too much regulation. Namely, the exchanges would seem to fear that too much regulation would make it difficult for average retail investors to trade cryptocurrency. As it stands now, there is a relatively low barrier to entry for traders to create accounts on most exchanges.
As cryptocurrency matures as an asset class, regulation will surely follow, but to what extent, and what effect it will have on the market, remains to be seen.