DCEs call for regulation in the wake of competitors going ghost
Updated: Jun 7, 2021
Last month we wrote about the intensifying discussions around the social and environmental footprint of digital currencies. But, as the tally for DCE's going ghost-mode gradually increases, this months hot topic is shaping up to be the under-regulation of DCEs (digital-currency exchanges). As it turns out, the rise in concerns aren't siloed to those watching from the fence lines. "Insufficient regulation and slow-moving policymakers" are issues equally troubling to market players within the crypto-space.
The respected Sydney Morning Herald, recently interviewed the co-author of this piece - Michael Bacina, and the chief executive of a leading exchange, Independent Reserve - Adrian Przelozny, on the topic.
Przelozny told reporters about his concerns about the regulatory haphazardness and what that means for companies who, intend to make a legitimate business:
There are no consistent sets of rules that exchanges need to follow, he says. You’re basically relying on people doing the right thing just because they want to do the right thing.
Large exchanges like Independent Reserve, which holds ~$1 billion in assets for over 200,000 customers are doing the right thing. But it goes-without-saying that conscientiousness should not be the only driving force behind fostering industry wide best practices.
The reality is that consumers may have a hard time discerning the difference between those exchanges who are meeting best practices and those who are not. That behaviour besmirches all in the industry, like Independent Reserve, who take utmost care with other people's assets.
We recently rang the alarm about ACX, the Australian-based digital currency exchange, who dramatically stopped responding to users' withdrawal requests and ceased updating the price of tokens on their website with around ~AUD$10 million in customer assets still unaccounted for and no action from any regulators towards the company. MyCryptoWallet has faced a similar situation with reports of client funds being blocked from withdrawal after the exchange reporting undefined "issues" that seem to remain unresolved.
The co-author of this piece was quoted by the SMH in saying:
Digital exchanges are rightly concerned about scams and myths that persist around digital currency being used by criminals, he says. There’s a real concern that there will be a large hack or significant scam, possibly impacting an exchange which isn’t meeting best practices, and knee-jerk regulation could be imposed in response.
As Caitlin Long put it very well in a recent online post, government needs to be careful that regulation is not stifling of innovation.
Blockchain Australia operates a certification process and subscribe to its Code of Conduct. If more members become certified upon the release of version 2.0 of the Code of Conduct, this would go towards uplifting industry standards and best practice, Be that as it may, there's no denying that the development of better overarching standards from regulators could help lift the bar for customer experiences in the digital asset space.