Investors call for “proper regulation” of the cryptocurrency market | Owners of assets

The cryptocurrency market must face the reality of proper regulation if it is to evolve as an alternative financial ecosystem. This is the opinion of some cryptocurrency investors Asian investor has been talking ever since the Collapse of the stable Earth / Moon currency.

Rajiv Manoharan, principal of Melbourne-based Manoharan Capital investing in cryptocurrency assets, acknowledges the damage caused by the recent turmoil, but is more bullish than most of the asset class.

“This is, of course, a concern; no one wants to lose money or see instability and loss of confidence in any market. However, historically in equity and other markets, as part of the maturation and institutionalization cycle of cryptocurrency markets, these “black swan” events will sadly be part of the digital asset and cryptocurrency journey. “

Others close to the market are more concerned about the structural problems that the debacle has highlighted.

“From my observations, we are still quite a bit away from a significant cryptocurrency market. There are those who believe these market disruptions are integral to iterations and fine-tuning. Personally I don’t think that’s the case,” he said. affirmed the private individual based in Singapore said the financier Edward Foo Asian investor.

“The reality is that no one has the ability to accurately predict where the cryptocurrency markets are headed now; even those who are in a strong enough position to lead the direction of the market. They too can be caught off guard by surprise events, ”.

“That said, I think some so-called Black Swan events are more of a train wreck waiting to happen than a real Black Swan event.”

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Timothy Tsui of the Hong Kong-based Arbutus family office and another savvy cryptocurrency investor said Asian investor he was “rather shocked by the destruction of the value and the speed of the fall of the MTS (Earth) and the collapse of the Moon was immense. I have friends who had invested in UST. When they woke up, their money had evaporated. “

Foo’s is concerned about investors who believe the cryptocurrency market is safe and self-regulating properly. The reality, he said, is that cryptocurrency markets don’t have built-in security mechanisms.

“I have yet to see workable risk-sharing structures; lots of great ideas but no real workable system. Without regulatory oversight and with genuinely weak legal structures, we have enabled a cryptocurrency market with severe systemic flaws to develop extremely rapidly. “

FUNDAMENTAL DEFECT

Tsui sees an inherent risk in algorithmic stable coins: “Since the industry isn’t regulated, they don’t have to tell you how many reserves they have. So it’s a leap of faith. It has created a lot of volatility in the crypto space.”

Cryptocurrency analyst Brandon Carl argues that while stablecoins as a construct are relatively new, the concept of pegging one currency to another is not. But “in the absence of external funding, it is impossible to create a successful algorithm”.

Carl believes stablecoin investors have long been the credit of stablecoin insurers.

“This is the equivalent of being short credit default swaps on stablecoin insurers. Being a closed system, this is inherently unstable. Since both parties must be compensated for the risk they take, neither party can do the other without the assistance of the outside world.

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“In the event that the funding comes from new entrants to the stablecoin / insurer ecosystem, the system is by definition a Ponzi scheme and is unstable.”

Foo says although he may not completely agree with Carl’s analogies, “the only thing I agree on is the danger of bare hedges (uncovered hedges) in a closed system.

“As such, in the short term, I am concerned about more train wrecks waiting to happen: crypto coins that have a similar structure to Earth and Moon.”

Manoharan is much more bullish. He believes cryptocurrencies are entering a new, more mature phase following this latest correction.

“Absolutely, 100%. We are significantly increasing our weighting and allocation to cryptocurrencies and we see recent events as a huge buying opportunity. In Australia, in particular, we are seeing big banks and pension funds get more involved and get started. to move. ANZ Bank partnered with ZeroCap for the first stable coin backed by the Australian dollar “.

REGULATION OF SOME KIND

In Asia, Singapore has taken the most proactive stance of any Asian jurisdiction in allowing cryptocurrencies to trade within certain borders. Globally, regulators have tried to keep it at arm’s length. In September 2021, Gary Gensler, chairman of the US Securities and Exchange Commission, described cryptocurrencies as “the Wild West” and suggested that much more regulation was needed.

Carl agrees that regulators should take some steps to allow the cryptocurrency industry to continue innovating: “We need to build our foundations on solid foundations. Investments that prove problematic should be properly regulated and efforts should be made to protect them against consumers.”

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For the cryptocurrency industry to rebuild self-confidence, Tsui says “some form of supervision is needed, otherwise it will remain a very volatile asset. I don’t think self-regulation will work.”

But that said, he also thinks regulation is counter-intuitive for the entire cryptocurrency industry, “which is trying to revolutionize the financial system without regulation.”

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