The recent meltdowns in cryptocurrency markets has wiped out more than $2 trillion in value which has been shoulder by many smaller retail investors. This bear market has shown a light on many areas of crypto markets that created and accelerated the crash. Even though we are still in the middle of the crypto winter it's time to talk about the need for tougher financial regulations.
Just like the traditional market crash of 2008 we need to look at the factors and players that got us to where we are at today. This crash has exposed vulnerabilities i markets reminiscent of previous financial turmoil. Extreme volatility and the collapse of specific stablecoins resulted in a run on liquidity that over leveraged traders and companies could not handle.
Global financial stability wasn't threatened like many once though, but systemic risks will grow as crypto becomes more intertwined with the wider financial system and going forward we can't have total collapses like we had with Terra Luna or hedge funds like Three Arrows filing for bankruptcy. Without enhanced regulatory and law enforcement frameworks we will continue to people and/or companies taking on too much risk. Just look at centralized crypto lending business, Celsius. They took deposits in cryptocurrency and they promise a yield on it. To get that yield they put those assets into very risky projects or into things that have a long liquidity horizon. This liquidity horizon did not account for the risks of a run on the lender and customers who expect to be able to withdraw their funds within 24 hours now have them locked up for months. This is why Celsius ended up freezing withdrawals and were forced to sell a huge amount of crypto. These action caused the selloff to accelerate.
The thing is technology doesn’t necessarily change the laws of economics and finance risks. I think decentralization reduces risk, but at this stage of adoption there is just way too much centralization. If this is going to be the case we need now to have regulatory system that will understand these new systems and manage those risks in terms of the crypto ecosystem and how they tie back into traditional economic systems.
I don't know what the regulation will look like, but I think we need to verify that companies and traders don't over leverage themselves. Companies need to carry enough capital in actual stablecoins are fiat to make sure there can maintain withdrawals. I think there has be predatory marketing of leverage on crypto. I there should be min account sizes for getting leverage. There needs to be investigation into market manipulation and tracking of hedge fund wallets. I'd also like to see a more robust and streamlined process for taxes. I know many don't like the regulation, but to continue adoption we need it. If crypto gets as big as I think it will we can live in the wild west.
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Maybe it will eventually be like the gambling industry. Heavily regulated on one side, but then there is always that guy you know at work running a Superbowl Board or March Madness Bracket...
There will always was to side step the regulation, but if we can fill the loop holes to make markets more fair for retail I think that would be a positive.
It just shows how irresponsible the companies were with other people's money. The people calling for regulation tend to be the people who lost money and I don't really think the government can really help that much.
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Companies will be reckless unless there is regulation. They will also be the first to ask for bailout when things don't work out. All of this hurts or funded by the common man. This issue I have is not with retail we can't move the needle it's the cooperations that suck.
I usually agree with 99% of your posts.....but this one is absolutely, 10000%, undeniably, un-categorically, the dumbest thing ever. Gov fucks up everything it touches. Thinking for a millisecond that they can regulate crypto safely might be the stupidest thing I've ever heard.
People need to do more research into the investments/crypto's they buy in to....it's called buyer beware. The best thing about crypto is that gov isn't really involved at all. That is a good thing.
Please re-think this one, man....
Personal reasonability is important, but we have companies screwing people over on fees, price manipulation, and straight up scams. There needs to be consequences for bad actors. I will argue that decentralization is a form of regulation that helps.
Change companies to government and you can see why I don't want them any where near crypto. Gov literally does this on the daily....legally and people applaud it and ask for more of it. It's maddening.
Decentralization is currently the best avenue of safe/beneficial transacting in crypto.
Personal responsibility should also always be at the forefront. People need to stop relying on a third party to safeguard their decisions. We're grow ups, time to start acting like it.
At some point people don't have the power to protect themselves. Think about monopolies say you have few options for gas and electric. We need it on a daily basis and now the electric company says they want to charge $100 KwH. With out regulation cooperations, large investors, hedge funds ect will take advantage of the individual. We can't stop it on our level.
Monopolies only exist because of government. They would not exist in a true free market. Gov regulations keep small companies from competing and entering the market place, they love gov and regulations because it limits their competition.
There was just a great piece on the "pilot shortage", long story short, gov regs mandated like 5x more training hours for new pilots. It went from like 4000 hours to 20 some thousand. Now people who wanted to be pilots have to spend way more money and way more time to become one. Which means less new pilots. The existing pilots and their unions love it, because it just makes them all the more valuable. Time after time, gov regulations do. not. work.
Crypto should not be regulated. That's the point of it all, like decentralized exchange. That's how it should be, let it be. It's not going to threaten the mainstream !
I guess my argument is regulation help, but decentralization is kind of like a regulation. If power is not centralized it's harder to do bad things.
Calling for governments to regulate as a stability is absurd.
Why do you want the government involved in this? They cannot even protect the traditional markets stable.
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So it’s a double edge sword. I think the true solution is decentralization, but we are not there. If things are centralized we need oversight because the concentration of prower makes people do what’s best for them at all costs. Without oversight these people will game the system.
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There is a population that is out for themselves. In fact we are all. However, some of these people have no problem hurting others. I don't want you to loose money so I make it. That's why i'm torn trading options.
Sounds like you have your own issues with hive. I would say people look out for themselves, but also each other. If you don't like this system leave or get a bigger stake to change it.
Every one is afraid of it being regulated. If or when it does happen so much money will be influxed into crypto the bull run will be ridiculous
I think this a very true statement. I think we should welcome it as it means we are being more closely adopted into main stream finical markets.
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