Crypto and regulation
On the 17th of January, Adi Robertson published the following article in The Verge: “Spain will regulate Influencers promoting cryptocurrency”. Throughout the article, he explains that the Spanish National Securities Market Commission (CNMV; Comisión Nacional del Mercado de Valores) will act against the free promotion of influencers over the crypto world.
According to the article, influencers with more than 100,000 subscribers that are paid to advertise a specific currency will have to notify the CNMV 10 days before they can launch the campaign. Moreover, during their ad campaign, influencers will have to display a warning reminding the public of the dangers of crypto assets. Very much like cigarettes, gambling, and alcohol, marketing will have to expose health exposures.
Yet is cryptocurrency a menace? If that is the case, should its promotion be regulated? These are the questions that will be answered within this article.
Is cryptocurrency dangerous?
It is quite blatant that anything regarding investing money is narrowly linked to risks, and therefore high rewards as well as instability. Therefore, to fully understand the risks of cryptocurrency, it is important to understand the existence of a security vulnerability.
Back in August 2021, the Blockchain Poly Network was hacked, meaning they lost around $600 million in crypto assets. As for any investment or anywhere you place your assets, money will never be entirely secured. Its decentralized status makes the crypto holder even more vulnerable in the eyes of hackers, as the assets are no standard practice to recover the invested funds. A bank could go insolvent, your stockbroker could lead you to the wrong investment, your cash under your mattress could turn to ashes as your entire house burns down. The crypto world, as digital as it is, is far from being associated with security.
On the financial aspect, cryptocurrency is known to be extremely volatile, making predictions harder and riskier. An investor’s portfolio could therefore skyrocket as well as it could completely plummet, meaning that full attention is needed to react as soon as possible.
Now, as you will be able to find all around today’s market, scams will forever be one customer threat. This is also the case for cryptocurrency, with attempts of stealing money through phishing e-mails, deceitful cloud mining platforms, or “exit scams”. What is an exit scam? It is simply the creation of a new cryptocurrency where investors can escape with money.
With the recent booming hype of cryptocurrency, dangers for pump and dump have become even higher than ever. As a reminder, pump and dumps are when: “scammers create false hype about a stock to generate interest. Once investors start buying shares, the price of the stock goes up. When the price reaches a certain point, the scammers behind the fake hype sell all of their shares. This causes the stock to plummet, which leaves new investors holding the bag” (www.cnet.com). As every influencer seem to be shouting the words: Binance, Ethereum, and Bitcoin, one can imagine how a deceiving influencer could react when he sees the potential through pump and dump.
In the eyes of the law, cryptocurrency is also known for its money-laundering capacities. Smurfing, or money-laundering through crypto exchanges and withdrawing from ATMs are the most known schemes that are currently operating. Furthermore, cryptocurrencies indirectly give access to the black market, the dark web in particular. Thanks to its decentralized status, tracing back transactions are close to impossible.
As well as being dangerous for investors, cryptocurrency is also harmful to the environment. To run blockchains and servers, intensive energy usage is required, meaning that there is a considerable backlash on the ecosystem.
All in all, the list of threats goes on, but does this mean that its promotion should be regulated?
Should cryptocurrencies’ publicity be regulated?
The answer is simple, yes of course it needs to be regulated. In my opinion, every advert, never mind the product, should display the drawbacks of a specific product. While the negative consequences of a product can easily be forgotten, it is consequently why potential consumers need to be reminded of the potential dangers.
Additionally, as 95 percent of 3 to 18-year-olds have home internet access according to the American Community Survey (ACS), it is essential that dangers regarding their health are understood.
In France for instance, most product promotion is regulated. For example, for unhealthy food, you will see displayed messages such as: “Pour votre santé, mangez au moins cinq fruits et légumes par jour” or “Pour votre santé, évitez de manger trop gras, trop sucré, trop sale”, which translates to: “For your health, eat at least five fruits and vegetables a day” and “For your health, avoid eating too much fat, too much sugar and too much salt”.
To educate and advocate for better health, customers must be aware of the drawbacks of the product or service. Hopefully, the CNMV’s decision will be the steppingstone to regulate cryptocurrencies’ promotion.
Sources:
https://www.investopedia.com/tech/what-are-legal-risks-cryptocurrency-investors/
Applying regulations to cryptocurrency would kill one of the main reasons why people liked it in the first place. Governments are afraid of cryptocurrencies, because they want to control every aspect of life of their citizen, and until recent years cryptos were a crack in wall of total surveillance. Of course, it is more a matter of personal beliefs, but I think we have to resist any measures that can help authorities to enclose us in digital imprisonment.
Everyone knows crypto is the best money laundering tool
But also, crypto with open books, such as Bitcoin, is traceable and it’s not that “fungible”. You can trace Bitcoin that had contact with exchanges without AML, and block it for AML-only exchanges.
That way, more and more Bitcoin is becoming unavailable to the broad public.
I still think that tokenising gold is much better, and there are serious companies/start-ups working on that already. Some day, who knows, we might trade globally in tokens based on exchangeable gold, or even instruments made of multiple assets – currency that’s based on gold, futures of the material market (including oil), stocks and bonds
Of course, it is a huge danger to the petrodollar, who knows what feds will do. I just observe the American empire fall every day, and just maybe, we will adopt gold or a commodity basket, once it fails.
I share a similar point of view. Regulating the crypto may prepare ground for change. One of the problems which need solution is the way the cryptocurrencies are minted. Proof of work system is often abused, which leads to defying the whole concept of sustainable energy production, as it is a serious contributor to energy use.