Crypto - The Self-Regulated Financial Market
An Embarrassment For Regulators, Lawmakers & The SEC
During the course of 2022, we have heard rumors and rumblings of increased regulation within the Crypto space, especially in regard to stablecoins. The SEC has been hammering away at Ripple while picking on soft targets like Kim Kardashian. During the same time, SBF has been conducting some very questionable practices, to say the least. Ironically, FTX US is a regulated entity and is forced to operate within certain boundaries predefined by US regulatory licenses. FTX US was also meant to be a completely separate entity and yet customers have fallen victim to the exact same fate as FTX Global customers.
Withdrawals were initially halted on FTX Global, only to be later joined by FTX US. This, was after SBF had assured customers that FTX US was in no way associated or affected by what was taking place with FTX Global and Alameda Research. However, in hindsight, that was clearly not the case. This all managed to take place under the “watchful eye” of regulators and the SEC. The questionable associations that have since come to light are still awaiting answers, and it appears as if the legal oversight has failed in not only one, but two instances.
Not only did all of this manage to go unnoticed by the regulators and the SEC, but it was actually exposed by the Crypto community. Just think about this for a second! Imagine failing to do your job, and then the very industry that you are supposed to be “working for” does your job for you. It’s an absolute embarrassment from every angle. An absolute failure in leadership and governance. Not only is Crypto one of the most transparent industries, due to the public ledger, but it actually goes about cleansing itself of bad actors.
Definitely Not Perfect
Now, I am not insinuating that Crypto is this crystal clear and pure industry that banishes all evildoers that bring the industry into disrepute. Rather, I am suggesting that it reveals that the majority of those involved in Crypto are actually not enemies of integrity, as so many have suggested. There are however still many bad actors out there. Furthermore, there are factions within the broader community, as well. I am not refuting that. There is no perfect world anywhere.
However, it says a lot to those watching from afar and suggests that Crypto enthusiasts should not be blanketed by the many accusations thrown around by certain influential individuals. Anyone with half a brain is able to see how the MSM is attempting to paint SBF in a “positive light”. They can also see that it was the community that actually took responsibility and chose to dig into the facts surrounding FTX. I don’t necessarily agree with all the events that have since transpired.
I do however agree with sifting through the data and coming to the truth of the matter. Regulators failed to protect users, and yet many were able to salvage their deposits and investments due to the diligence of the broader community. A lot of people are concerned about the failings of SBF and FTX, as a whole. However, I find it more concerning that the regulators and SEC were nowhere to be found in this entire story. There is also a lot to this story that I am respectfully not going to address. It is however very clear that this was a significant failure on the part of regulators and the SEC.
Final Thoughts
I recently mentioned in a previous article that regulation should in fact be concentrated toward the exchange or entity. However, it appears as if KYC and AML are the primary focus. Sadly, this does nothing to protect users and raises a very important question regarding the efficiency and relevance of current regulatory practices. As many of us have said before, we understand that regulation has to come, but it actually needs to be applicable, relevant, and helpful.
Previously, I thought regulation would take time to get sorted out. This recent debacle has just served to display how impoverished the current regulatory framework is, and how much needs to be addressed if we are ever to have anything that actually resembles effective regulation. A disappointing “show” nonetheless. I guess we wait to see how regulators choose to progress from here.
Disclaimer
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This article was first published on Sapphire Crypto.
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