Fair and Orderly Markets with Bitcoin take Good Actors – Prices True to Real Value of Bitcoin

By Steven Anderson March 20, 2019 Off

Massad, who chaired Commodity Futures Trading Commission during the Obama administration, when talking about the need for cryptocurrency exchanges to ensure safeguards for investors stated,

“Crypto-exchanges are not now required to have systems which prevent fraud and manipulation, neither are there rules which prevent or minimize conflicts in interest. Crypto exchanges engage in proprietary trading against their customers, something which the New York Stock Exchange cannot do. Regulations that minimize operational risk to ensure system safeguards are needed, just as with securities and derivatives intermediaries.”

The absence of traditional market standards opens the market for a lot of fraud, which in turn is going to cause more harm to investors.  There is no protection for investors in the current market scenario.

Cryptocurrency exchanges lack oversight, and this has led to repeated incidents of conflicts of interest, fraud, and market manipulation.

The lack of accountability in the current scenario is caused due to the regulatory distraction caused by Bitcoin and other cryptocurrencies.

The hype according to Massad is the major cause for regulatory distraction.  The creators of Bitcoin promised that it would likely solve the trust issues and reduce the reliance of the masses on the centralized financial intermediaries.

However, to date, the power of the larger institutions on traditional foundations continue to dominate the banking needs of the masses.  And, several financial intermediaries between the cryptocurrency world and the traditional financial world with less accountability have cropped up.

Winklevoss Twins recently called for self-policed and general regulation to be the surest way to improve institutional investment.

With capitalism working its way to improving the quality of life of people from across the world, the current day financial markets are adapting by way of product development with progressive regulation from the participants in the ecosystem.

With the Bitcoin settlement layer being faster than the traditional markets, though not instant can help companies operating on the Bitcoin to borrow money without going through the price risk. If good actors facilitate the flow of money using a network model with sufficient scalability, it can help create fair and orderly markets.

Cryptocurrency industry as an overall goal of the sector are competing with the traditional financial system, and they are using the existing tools to leverage that blockchain to improve on their function eventually.

Improving market liquidity and price discovery comes with balancing the supply and demand for Bitcoin in the different fragmented market places.  Prices that are true to the real value of Bitcoin are paramount in improving the usefulness and growth of Bitcoin.