Regulators are the Biggest Obstacles for the Crypto Space, says CME Chairman & CEO
Cryptocurrency markets had a terrible 2018, probably worst ever yet. All major digital coins, including Bitcoin, kept suffering the bears throughout the year. Bitcoin kept losing for six consecutive months, finally ending the streak in February earlier this year.
In spite of the declining trends, the crypto space reportedly grew by 122%. This, in itself, is an achievement. Giant traditional companies like Facebook and JPMorgan penetrated the space, which is an excellent boost for the crypto market at large. However, the market has also been battling in various regions against regulations and bans worldwide.
Speaking against the problem, Chicago Mercantile Exchange Group (CME) Chairman and CEO, Terry Duffy stated that regulators are the worst things to happen for the crypto space. Regulators will not approve of cryptocurrencies, unless they are backed by traditional currencies, he added. Duffy, however, feels regulatory approval is necessary for the market to thrive.
Cryptocurrencies have been facing several issues with regulatory authorities worldwide. For instance, the Reserve Bank of India released a circular in April 2018, directing all banks in the country to refrain from providing services to crypto related businesses. Following this, banks stopped serving the crypto space from July, which resulted in huge losses to crypto exchanges. Some of the businesses had to suspend their operations in the world’s fastest growing economy.
The CME CEO also believes that too much of focus remains on speculation, rather than their use and adoption. He said that it is highly unlikely that authorities approve cryptocurrencies like Bitcoins, as it would prevent the governments from running deficits.
However, efforts have been taken by governments to explore the crypto space and identify their real-world uses. The best example is Russia, which is working on launching its own cryptocurrency, in a bid to reduce its dependence on the US Dollar. As many experts and analysts have previously suggested, cryptocurrencies can play a pivotal role in pulling economies out of recession, the way it has been witnessed in the case of Venezuela.
A further boost to space is being provided by companies like VISA, which is working to integrate blockchain technology with its global operations, in order to facilitate crypto payments. JPMorgan became the first bank in the US to launch its own digital currency, and similarly, Facebook will also be launching its own digital token.
What has worsened the case for the crypto space is the creeping number of scandals, scams, and hacks taking place in the industry. The recent QuadrigaCX Exchange debacle is just one of many examples, in which about 110,000 users on the exchange lost a total of $190 million, after its CEO’s sudden death. Earlier this week on Sunday, a hack was reported on the Singapore DragonEx Crypto Exchange, similar to the ones which have plagued the space for quite a long time.
All these factors have made cryptocurrencies a topic of debate for regulators, and solution to this seems at a distant far. According to Duffy, stablecoins, which are backed by either by fiat currencies or any other traditional assets, are more acceptable for regulators, as they provide insulation from extreme volatility the normal ones have suffered. Bitcoin reached its peak in December 2017, when it was priced at over $19,700 apiece, after which it nose-dived to be currently priced at just around $3,900. It is this instability which makes people refrain from cryptocurrencies.
Nonetheless, many industry stalwarts have been optimistic about the growth of cryptocurrencies, including Tim Draper, the billionaire venture capitalist, who recently predicted that Bitcoin prices will reach $250,000 apiece as early and 2022-23.