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Regulators Around the World Continue to Fail to do There Most Vital Job.... Protecting Investors

By Cje95 | Chronic Illness and Crypto | 16 Aug 2022

This summer has been a huge shakeout for the crypto space as we have seen countless crypto firms fall into bankruptcy. For Publish0x readers and writers, a common name was Hodlnaut which initially seemed to escape the lending services collapse before suspending withdrawals earlier this month. Even though it was not the first to fall and certainly will not be the last its fall stuck out compared to others for one particular reason. It had been granted temporary approval for a digital payment token services license in Singapore. 


Surprisingly when you look at the crypto lending service landscape there is a noticeable hole in licensing. I say surprisingly because with all of the noise that the SEC has made over the last year or so it would not be crazy to think that they had implemented some sort of license or regulation but thus far they have not done so. As the industry grew since the summer of 2020 services started to claim to have tens of billions of dollars in assets deposited on their platforms however regulators never really caught up to this growth. It is only now that lending services and other companies are falling that the regulators are appearing to take notice, just last week regulators, in California sent Celsius a cease and desist letter.


When Singapore set up a licensing process that had gained a reputation for being extremely hard to gain it seemed to mark a change in the industry that gave companies the ability to gain a license that would seemingly back up what they were offering. So when Hodlnaut received a temporary license it gave it the appearance that it was a more secure and stable service compared to the others out there. It was because of this appearance that I decided to utilize the lending services they provided and deposited some Bitcoin and USDC. 


As we know now this was not the case as Hodlnaut suspended withdrawals and withdrew its application to gain a permanent license from Singapore regulators. This failure builds upon a series of failures including a series of high-profile withdrawal suspensions that have affected a large number of users in the U.S. The failures of both Celsius and Voyager compound the issues faced not only by these companies but regulators involved as Celsius and Voyager have both entered bankruptcy resulting in a long and drawn-out process for funds to be accessed at any sort of level.


In the U.S. there has been an issue with who would be in charge of regulations for the industry and these remain unsettled. However, the SEC has been getting heavily involved in the space for several years now and this has led both politicians and everyday individuals to wonder why they did not do more. Currently, the SEC is dealing with the image that it is overbearing and picking winners and losers (the Ripple court case and BlockFi). Since it had previously taken action against services in the space (BlockFi) many are wondering why they did not do more. As it currently stands the SEC has not addressed these issues and has been quick to pass the blame along to Congress, which is partially responsible, but when you are issuing rules and regulations it results in a confusing image to allow for such monumental failures. 


When looking at the whole situation I think the SEC has honestly given Congress the ammo it needs to make sure that a vast amount if not all crypto regulation should not be something that falls to it. To me, it seems that these failures are only going to push legislation forward that will solidify the CFTC as the de facto regulator with the SEC left to the traditional assets it has always been in charge of. With so much damage already done to the centralized lending space, it is hard for it to get much worse without it moving to exchanges, and to prevent that very thing from occurring I hope to see legislation proposed, debated, amended and passed that will help prevent this and provide both guidance to these companies and some basic protections to the new investor. 


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Graduated from Texas A&M in May of 2020 had dabbled in crypto since 2017 but dove in at the end of 2019. December of 2020 packed up and moved to D.C.! Huge sports fan, space nerd, and international newsreader! Follow me on Twitter @Cje95_

Chronic Illness and Crypto
Chronic Illness and Crypto

Cryptocurrency and Blockchain are going to be a huge part of the future and no matter who tries it isn't going to be stopped! Here I try to give my best insight and thoughts into the latest crypto news, features, developments. Further, I look to discover any link to news from the United States ranging from social-political issues to stock market and economic data.

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