Legendary cryptocurrency pioneer Satoshi Nakamoto wanted a financial system based on mathematics rather than trust – but a decade after Bitcoin was unleashed on the world, trust seems to be what investors are looking for.
Nakamoto dreamed of a financial system beyond the control of governments and banks.
But a new survey of businessmen and investors shows the sector is crying out for regulation to take away uncertainty.
The study, by US law firm and consultancy Foley & Lardner LLP discovered that so far, regulatory activity was confusing.
The study gives the example of Securities & Exchange Commission chief Jay Clayton has stated every initial coin offering (ICO) he has seen so far is a security, while SEC Corporation Finance director William Hinman has told Congress that coins and tokens can ‘theoretically’ avoid being securities.
Regulation v self-policing
Responses to the study showed 84% wanted official regulation of ICOs, 68% wanted regulation of cryptocurrency trading and 55% for regulated payments of goods and services.
But, the same people also believed cryptocurrency should self-police through voluntary common standard (86%) and 89% wanted a formal self-regulation of the sector with regulatory oversight.
And while 72% felt the cryptocurrency industry had a poor understanding of federal and state regulation for financial services in the US, 58% were still willing to invest in the sector.
The study also shunned the idea of governments developing their own cryptocurrencies with 58% against and 25% in favour.
Hackers are biggest threat
“Hackers and security breaches are seen as the most pressing threats to the viability and growth of the cryptocurrency industry, though manipulative trading of cryptocurrencies and fraudulent offerings are also high on respondents’ radar,” said the report.
“A strong majority (72%) support the opportunity to invest in exchange-traded funds holding cryptocurrencies. Regulators have sent mixed messages on this point, with concerns cited relating to valuation, liquidity, custody, arbitrage and potential manipulation.
“Bitcoin and Ethereum are the leaders in cryptocurrency, according to survey respondents. Bitcoin is viewed as the most likely to gain the broadest acceptance for use in making payments by 43% of respondents, with Ethereum second at 17%. Ethereum is seen as the best investment opportunity by 38% of respondents, slightly edging out the more established Bitcoin (35%).”