{"id":336342,"date":"2022-07-13T11:20:13","date_gmt":"2022-07-13T15:20:13","guid":{"rendered":"https:\/\/insidebitcoins.com\/?p=336342"},"modified":"2022-07-13T11:20:13","modified_gmt":"2022-07-13T15:20:13","slug":"crypto-in-regulation-we-trust","status":"publish","type":"post","link":"https:\/\/insidebitcoins.com\/news\/crypto-in-regulation-we-trust","title":{"rendered":"Crypto: In Regulation We Trust"},"content":{"rendered":"

The crash of the digital asset markets, accelerated by the failure of two multi-billion-dollar DeFi initiatives, has once again left users questioning whether crypto can be trusted.<\/span><\/p>\n

The short answer is Yes: there are plenty of trusted and trustworthy actors and platforms. In fact, trusted platforms provide the gateway to crypto for millions of users, and are likely to continue to do so for the foreseeable future.The question of <\/span>which <\/span><\/i>services to trust is also easy to answer. It is the regulated, compliant platforms that have proven robust when users are seeking safety.<\/span><\/p>\n

Lessons From The Past<\/h2>\n

Back in 2014, the collapse of MtGox \u2013 the first and largest bitcoin exchange, at one point responsible for around 90% of total BTC trading volumes \u2013 plunged the sector into a deep bear market. \u2018Not your keys, not your coins\u2019 was the refrain and the lesson from that debacle: if you trust your crypto to a third party, you give up control of it and lose one of its strongest advantages over TradFi.<\/span><\/p>\n

Eight years later, two projects showcase the failure of trust in the crypto sector: Terra, and Celsius. Both are \u2013 or were \u2013 unregulated products that made huge promises. Both appear to have failed, taking billions of dollars of customer money with them.<\/span><\/p>\n

TerraUSD (UST) was an algorithmic stablecoin, built on the Terra (LUNA) blockchain. UST was supposedly pegged to the US Dollar and offered high rates of return, but when <\/span>confidence faltered, so did UST\u2019s peg<\/span><\/a>, and the whole $60 billion house of cards fell practically overnight.\u00a0<\/span><\/p>\n

The second project was Celsius, a crypto lending platform that also offered users outsized returns for depositing crypto. In June, \u2018extreme market conditions\u2019 prompted Celsius to prevent customer withdrawals so that it had the collateral to avoid being wiped out on a series of bad trades. The company is now said to be <\/span>looking at bankruptcy<\/span><\/a>.<\/span><\/p>\n

\"Celsius\"<\/p>\n

Both of these episodes have drawn attention from regulators. Both represent some of the worst excesses in the crypto sector. Fortunately, they are not indicative of the whole.<\/span><\/p>\n

Trusted Crypto Organisations<\/h2>\n

Outside of the limelight, there are the case studies that show, behind the scenes, that trust in crypto has a strong foundation on which to build.<\/span><\/p>\n

Let\u2019s take two counterpoints to Celsius and Terra \u2013 both unregulated crypto projects that have played fast and loose with users\u2019 money, albeit in different ways. Coinbase is, like Celsius, an enormously popular custodial platform \u2013 the difference being that, as a US-based and NASDAQ-listed company, it is one of the most heavily regulated organisations in the space. Then there are the fiat-backed stablecoins that have received renewed attention in the wake of Terra\u2019s collapse \u2013 and which have fared differently, according to their regulatory status.<\/span><\/p>\n

\"Crypto\"<\/p>\n

Coinbase<\/h3>\n

Coinbase has become synonymous with crypto for millions of people. Its popularity has soared over the past two years, and the platform continues to grow despite the bear market.<\/span><\/p>\n

Founded in June 2012, Coinbase acquired over 60,000 verified users in its first nine months, and grew to a million in the following year. As of 13 May, 2022, <\/span>the exchange had almost 90 million registered and verified users<\/span><\/a>, and a quarterly trading volume of a third of a trillion dollars. In total, over 11 percent of all crypto trading takes place on Coinbase. The platform is a by-word for trust for tens of millions of users.\u00a0<\/span><\/p>\n

Despite scaling back hiring during the bear market, Coinbase continues to blaze the trail, expanding the number of coins and tokens they offer. They are in the process of listing dozens more, increasing transparency by <\/span>trailing possible additions<\/span><\/a> to the crypto community and scheduling when listing will take place. Projects and the tokens\/coins recently added to Coinbase, or next in line, are as diverse as:<\/span><\/p>\n