Viktor Prokopenya, founder of VP Capital and investor (pictured), currently focused on fintech and AI, considers the effect of regulation on cryptocurrency.
The whole crypto world is driven by one word – freedom. Therefore, ensuring the industry is transparent, clear and law abiding is the key to retaining freedom. I passionately believe that crypto needs to be regulated. Furthermore, I think that the industry should actively lead the way – and focus on the positive impact regulation can bring.
If we want crypto to become a part of the reputable financial framework, we have to accept that regulation is a necessary part of growing up. Binance ignored regulation for too long and look what happened – it is now banned in many economies while allegations of tax fraud and money laundering are investigated.
Regulation will come anyway as our industry grows – so let us welcome it. There are those who would curb the industry altogether, banning financial institutions from dealing in cryptocurrency and we play into their hands if we do not come to the table and behave responsibly.
We industry pioneers should act as custodians of the system, preventing its misuse and protecting consumers. Conversely, regulation without the help of practitioners can lead to mistakes and misjudgements, unintended consequences and risk.
If we want our industry to progress, there is only one way forward – we should help governments to shape regulation.
Some green principles addressing the carbon footprint of crypto are likely to be included in future regulation, and this is quite right – we have to ensure that cleaner technology and cleaner energy sources are used if we are to make next generation finance sustainable.
We can expect regulation to promote consumer and investor protection, market integrity, and financial stability, leading to increased legitimisation of the sector. This synergy will attract new investors and allow crypto to expand into the ‘mainstream’.
In time, this will lead to greater legitimacy of the sector. In turn, the best operators will rise to the top and become more profitable, with shady competitors disappearing from the market.
Regulation is the next frontier for crypto – it is a mark of our industry’s success. We must not fear it, but instead embrace regulation as the next stage of crypto development ends.
