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The mammoth trillion-dollar industry of cryptocurrency is on shaky grounds after the scandals of 2022 imploded crypto giants like FTX and Alameda. According to the federal allegations, Bankman-Fried’s fraud wiped out $8 billion of his investor’s money, resulting in the collapse of his $32 billion crypto conglomerate. The destruction initiated a ripple effect throughout the crypto market in the last months of 2022, with its impact still felt in 2023.
But in the long run, the SBF’s downfall may prove more to be a boon than a bane, according to some experts.
Rationalization of the Crypto Market will be Beneficial For Bitcoin – Says MicroStrategy Co-Founder
Michael Saylor, one of the most prominent advocates and corporate backers’ of Bitcoin and Co-founder of MicroStrategy, which currently holds 132500 BTC, makes a rational prediction of this undoing and has said, “The meltdown has created short-term negative headwinds for Bitcoin because Bitcoin is cross-collateralized with all these other cryptos. But in the long term, the rationalization of the crypto market will be beneficial for Bitcoin”.
“The bankruptcy stories of BlockFi and Celsius, FTX, Alameda, Genesis, and Voyager highlight the integrity of the crypto space as much as it exposes its vulnerability and fragility.” says the Co-Founder of Microstrategy, stating that the “meltdown was painful but is necessary for the industry to grow”.
Crypto has brought in an avalanche of innovative ideas with its bullishly industrious attitude toward a borderless digital monetary network. However, it does come with its own share of risks. Overly excited entrepreneurs who are the flagbearers of this innovation resort to recklessness to get their point across. And their “us against the world attitude” has proven to be an expensive risk, paid for by common investors.
So, what it needs now is a proper framework to maintain standards and safeguard investors’ interests.
According to Saylor, Bitcoin’s strength as a decentralized digital commodity was underscored by the failures of others that did not share those same qualities.
Bitcoin is a commodity that investors can self custody without an issuer. The vast majority of all the crypto tokens out there are unregistered securities trading on unregulated exchanges, and they’re fairly centralized.
Saylor says, “….what the world wants is digital assets and digital commodities and digital securities, but there’s no way to register a digital security”.
Progressive, Not Regressive, Intervention is What Will Push Crypto in the Right Direction
Currently, there is no clear roadmap for registering digital security and no clear guidelines for designating a digital commodity.
It [crypto] needs adult supervision from congress and the SEC. It needs Goldman Sachs and Morgan Stanley to intervene and show investors the rope. According to him, the crypto industry should move forward now with proper regulatory intervention.
He thinks the intervention in the past has been restrictive and regressive. What the marketplace is waiting for is positive and progressive regulation. It is looking forward to is for the regulators to show investors how to register a digital currency and how to register a digital security or digital commodity.
Saylor says, “…instead of saying all the crypto exchanges should register, we need to get the crypto exchanges registered because the future of the industry is registered digital assets trading on regulated exchanges where everyone has the investor protections they need and the investors understand the difference between Bitcoin and a stablecoin and a security token…”.
Clear regulation will change the narrative of this industry. It will give more power to the regulators and accelerate their intervention. With the involvement of progressive regulation, the industry may witness fewer tokens, but they will be properly registered tokens. As a result, the industry will grow more rapidly, and investors are going to benefit from that.
And while the authorities mull over regulations, remember that the cryptocurrency market is still volatile. Bitcoin is heading back to its $20 zone now that the bullish fever of January 2023 is over, and other tokens are following the same trend. Such instances make it important for investors to hedge their bets and invest in presales that they can profit from away from the live trading markets.
In addition to giving investors an early moving opportunity, these new cryptos are flagbearers of innovative ideas. They are bringing much-needed utilities to blockchain that are sure to have major upsides in the long run.
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