Crypto market regulation is on its way

Regulation of crypto markets is heading towards realisation. The International Organisation of Securities Commission (IOSCO) disclosed that the digital currency market is an area of focus. The IOSCO chair, Asley Alder, revealed that cyber security, operational resilience and transparency were risks that needed regulation.

The collapse in Luna and losses suffered by Tether, so-called stablecoins, have severely dented market confidence in these instruments. Moreover, their failure has given credence to regulator concerns regarding crypto disruption to financial stability.

What can be inferred from this week's volatility is that the integrity of stablecoin algorithms is questionable. Moreover, there is a worrying lack of transparency, i.e. Tether has not been completely forthcoming with details regarding the nature of its reserves. One would think that for a peg to be claimed, regulators would need to look carefully at the enforcement of fiat reserves or even real assets as a backing.

References:
www.reuters.com

Russell Shor

Senior Market Specialist

Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.

Trade the News: View our Economic Calendar

Disclosure

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

${getInstrumentData.name} / ${getInstrumentData.ticker} /

Exchange: ${getInstrumentData.exchange}

${getInstrumentData.bid} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}