Expert: The cryptocurrency market needs regulation

20 november 2017

Analytical Center experts took part in the Blockchain & Bitcoin Conference Moscow, the largest event of its kind devoted to blockchain and cryptocurrencies in the CIS. During the conference domestic and foreign experts talked about the market of cyrptocurrencies, initial coin offerings, investments in tokens and about how to best integrate blockchain and business.

On the first day of the conference, there were two parallel streams of presentations. The Financial Sphere stream was all about how to use blockchain and cryptocurrencies in business. The Developments stream was about the technical aspects of the new financial technologies. The participants talked about the modern trends in the development of the crypto and blockchain industry, touching upon the issue of the legal regulation of initial coin offerings and cryptocurrencies in various jurisdictions. Special attention was paid to initial coin offerings, an issue that was considered not only from the point of view of the law but also from the point of view of the organizers and investors. In addition to reports, the conference also featured panel discussion and master classes that looked at specific cases.

The Analytical Center has been actively involved in studying the various aspects of the digital economy and cryptocurrencies, taking an active part in various discussions as well as organizing its own events that experts and industry practitioners get invited to. Deputy Head of the Analytical Center Blockchain & Bitcoin Conference Russia believes the number of speakers and participants at the Blockchain & Bitcoin Conference Russia conference prove that the sector has grown tremendously from its initial technology sandbox stage and is now actively feeling out and expanding its boundaries.

"The development of a digital economy implies that the number of intermediaries between people and businesses drops tremendously with more and more reliance on cryptographic algorithms and decentralized registries. This cuts transactional costs but there is also a downside: private investors that are entering this market are asking more and more questions about their rights protection and legal implementation of relations between the parties in this market on a more solid legal basis as they clearly are not getting that in sufficient amounts," the expert said.

Mr. Pokatovich believes that a lot of institutional investors, including such major investment companies and investment banks as BlackRock and JP Morgan are still regarding the cryptocurrencies market with a lot of skepticisms and it's easy to understand why, seeing how the anonymity, which is being hailed as the major benefit of cryptocurrencies, directly clashes with the principles of the KYC/AML (Know-Your-Customer/Anti-Money Laundering) policy.

The current capitalization of the cryptocurrencies market to a large extent manifests the value of the freedom from regulation. "But in order to function in the existing legal and financial infrastructure, regulation is necessary and the market is demanding it more and more," the analyst is sure.

"At the same time the new technology solutions do not always create new entities in the legal sense or completely change the nature of the relations between counter-parties, so whatever amendments are made to the existing regulations must take that into account as well," Mr. Pokatovich summed up.

Photo: from open sources