The ongoing crisis in the crypto ecosystem is not a secret to anyone. There were times when the market displayed some positive moves but swooned again. The happenings are not far-fetched from the multiple adverse events in space.
The most prominent one is the fallout of the renowned crypto exchange, FTX. While this seems to be on top of the list, tightening and interest rate hikes negatively influenced the market.
However, the fallout of the FTX exchange is not a reflection of the end of blockchain technology. In the financial market, businesses come and go. So, it’s not a new event to see a company stop out of the system, says Goldman Sachs in a Friday research.
The bank added that for now, regulators should be more concerned about the point of trust of investors. This is what guarantees the future return of funds after an exchange. According to the report, the present crypto market turmoil is well-recognized and projects warnings to investors.
Developing a relatively new and volatile asset that promises quick wealth is easy in crypto. Unlearned investors can easily fall into such traps as opposed to their initial beliefs.
Place For Sufficient Crypto Regulation
Goldman analysts Daniel Sharp and Jeff Currie opine that proper regulation will tackle the time factor that creates the opportunity for theft cases to occur. According to them, the crypto space still lacks sufficient protection per the existing regulators and rules.
As a result, the financial instruments implemented have little or no regulations backing them up. This is an act of mediocrity, which leaves the ecosystem vulnerable to fraud.
This is why widespread fraudulent activities existed in the crypto bubble years back. Unfortunately, the same occurrence seems to be ongoing, particularly with speculative investors wishing to get rich quickly.
For this set of individuals to access the market, they’ll need to go through certain crypto exchanges, also known as gatekeepers, like FTX.
Since the idea is to get rich fast, they offer funds to such institutions, leaving them with a red face. For investors to be guaranteed the future return of their funds, regulation must be well involved.
Investors’ Trust As The Priority
Placing investors’ trust as the priority is a way to mitigate the chances of fraud in the crypto space. Goldman Sachs also cited that this act should replace the many concerns placed on blockchains.
Also, regulators should desist from interfering with blockchains after sorting out digital asset financial features. For instance, the regulation of a token used as a financial instrument should be similar to other securities.