The New York attorney general has launched an inquiry into cryptocurrency exchanges on Tuesday, it has been announced.
Eric Schneiderman says he will review various platforms for trading Bitcoin, Ethereum, Litecoin and Ripple in an effort to protect consumers.
“With cryptocurrency on the rise, consumers in New York and across the country have a right to transparency and accountability when they invest their money,” Schneiderman said.
I couldn’t agree more and I champion Mr Schneiderman’s proactive approach in this matter. I’m sure his rigorous inquiry will indeed ultimately serve to increase protection of consumers, as well as helping to combat illicit activity and to increase confidence in the burgeoning cryptocurrency market.
In my view, the fact that the New York authority is looking into cryptocurrencies is perhaps a further indication of how they are increasingly becoming mainstream and is a further move towards regulation.
Due to the rapidly expanding market – which is approaching a market capitalisation of $1trillion - there is now an enormous need for a robust regulatory framework and strict ongoing supervision. Whether traditionalists and crypto cynics like it or not, digital currencies in some form or another are here to stay. They are the future of money.
As I have previously publicly stated, I believe that the best way to address the regulatory issue is via the exchanges. Nearly all foreign exchange transactions go through banks or currency houses and this is what needs to happen with cryptocurrencies.
As such, I welcome Mr Schneiderman’s fact-finding mission into crypto exchanges.
He is absolutely right to want to ensure that cryptocurrency investors are completely aware of what they’re getting into, when they buy, sell, exchange and store digital coins such as Bitcoin, Ethereum and Ripple on exchanges like deVere Crypto.
Therefore, I would urge those being reviewed to be as cooperative as possible by providing details on their operations, internal controls and safeguards.
Early on Tuesday, Bitcoin – the largest cryptocurrency by market cap – jumped value by more than $1,00. This surge comes after a buoyant week for all the main digital currencies, after a relatively bearish first quarter.
Bitcoin’s hike to $8,000 followed Christine Lagarde, Head of the International Monetary Fund (IMF), extolling the global benefits of cryptocurrency.
In a blog post, she highlighted that cryptocurrencies could enable quick and inexpensive transactions, while the underlying blockchain technology could make financial markets safer.
She added: “Just as a few technologies that emerged from the dotcom era have transformed our lives, the crypto assets that survive could have a significant impact on how we save, invest and pay our bills.”
Whilst, I fully welcome Mr Schneiderman’s important and pioneering inquiry, due to their global nature, cryptocurrencies need to be regulated on an international level.
As such, the G20’s setting of a July deadline for the first significant step towards some united regulation of cryptocurrency is a major step in the right direction.
Nigel Green is founder and CEO of deVere Group. One of the world’s largest independent financial advisory organizations, de Vere does business in 100 countries and has more than $12 billion under advisement.
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