Big Brother getting his hand in your cookie jar? Not so much actually. What these regulators and government organizations are doing is preventing less sophisticated investors from getting suckered into potential scams and taking exorbitant losses. That's right - The recent crack down in China and from the PBOC (People's Bank of China) is consumer protection.
It started a couple weeks ago with an info note from a public bulletin out of the SEC. They were followed up by various other regulators including the CSA (Canadian Securities Administration) and China's anti fund raising fraud initiative that noted cryptographic assets as a potential vehicle for this.
In these bulletins each regulator went as far as categorizing I.C.O. as a security. When an institution, body or business is exchanging an investment contract with you for money, they are selling a security. A license for this activity is required and only attained when certain standards are met - This is includes use case, viability, solvency and business practices.
As these regulators apply standard economic definitions to these wealth vehicles, they aren't doing it to rob you, to centralize or to get more taxes. The entire purpose is to prevent criminal activity from occurring in which you, an investor, may find yourself the victim of fraud taking losses that are unrecoverable.
Regulators from around the world are doing exactly what they are supposed to, implementing consumer protection. This includes defining wealth vehicles, making rules, and leveling the playing field so that you have the opportunity to participate. With this guidance, the only real risks you face are your own inefficiencies.
The SEC, CSA and PBOC want you to beware the snake oil salesman with his cure all crypto currency - I relish in this. An interesting aspect of the new cryptographic asset space is that individuals with absolutely zero knowledge or experience in trading and investing have put money to work.
A head of the SEC has made note of this - Trading and investing is not child's play, it's zero sum. Someone has to lose for someone else to win.
It's not a bad thing, but the school of hard knox in traditional equity markets is enough of a learning curve for most novices. Enter the world of crypto where the volatility is through the roof and the lack of corporate fundamentals, economic understandings and trading and investment practices will see individuals lose everything they have. There is an old adage, 90% of people who try to day trade equity markets lose everything, if after 6 months you are profitable, you made it, you have a shot, but nothing is certain...and most people fool themselves.
So, while the whiners whine about regulators, big brother, the tax man and centralized markets, they fail to recognize their own limitations in understanding the complexities of trading and investing any assets. They fail to realize that rules and standards are required.
Some folks will say, "Well if you got swindled, that's your own fault!" Very true! If you get swindled, it's your own fault, but when it happens to those same individuals (DOA Tokens, Bit Connect etc.) they will cry for regulators to make it better.
The scales of justice is a symbol of balance and the legal intervention out of china is just that, balance. What occurred broadly in the crypto markets is what we refer to in capital markets as a "black swan" event. Unpredictable and devastating. Fear takes hold, people sell and take significant losses. Its generally an emotional response by the less savvy and risk off for the more practiced.
Originally the news made it seem like all crypto was in jeopardy, however upon reading the legislation from the PBOC it was clear in the language that the entire purpose was to prevent fraud, halt everything and go through proper channels. The language went as far as acknowledging Bitcoin and Ethereum as legitimate.
With 4000 + coins out there, a massive consolidation should have been expected and is now starting. Investors and traders will really have to do the due diligence before taking positions as the cryptographic assets out there that are simply hot air will begin to deflate - risk off.
As panic set in, the super discount sale got bought up just as fast as it occurred. This is known as a dip buying opportunity. The market is still rattled and there are still deals to be had, however, a very practical approach would be avoiding any I.C.O. that has not gotten a green light from their respective governing body.
As the dust settles and cooler heads prevail, we already see these regulatory bodies allowing certain I.C.O. to proceed, such as IMPAK COIN right out of Quebec, Canada. The CSA has approved their continued operation. A legal investment firm has begun operating in the U.K. with the intent of guiding these small business through the approval process.
The crack down, or halt on I.C.O. was merely a way to streamline a process for approval, not big brother snatching the market from your finger tips.
As the crypto paradigm has grown, the easy money has been made. Regulation is simply the next step in ensuring that misinformation, FUD, HYPE, ponzi schemes, pyramid schemes and crooks don't get the best of you. Clearly defined products, rules and practices are the next step in mass adoption.
Whether the early adopters like it or not with out this occurring, the average joe will never be confident enough to participate. If you want to sell your bitcoin, ponzi coin, what ever, you need someone to buy it from you. More adoption, means more money flowing through the crypto market.
With all of that said, I won't be surprised to see more market moving news from regulators that drives big draw downs or causes massive price appreciation. Just this morning and still being carried to news outlets, China has cracked down further via an order to close several crypto exchanges by end of day today. This may well be FUD but because of the novice nature of many participants in the markets it is certainly having an effect on price.
The biggest thing to remember is that in the age of social media, troll-boxes and fake news -- the misinformation abounds. You either play cautious or understand your risk tolerance and take advantage of the opportunities as they present themselves.
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