Although a lack of regulation and anonymity almost certainly helped the cryptocurrency industry rise to prominence in its early days, the same appears to be the opposite in 2019.
Could a lack of transparency and excess privacy actually be hindering the growth of the cryptocurrency space? It appears so.
It is about time to take a closer look at the regulatory state of the cryptocurrency space, and also at the victims of missing regulations, which will be examined using the Karatbars case study.
The Crypto Market is Opaque
Unfortunately, though the crypto market has certainly blossomed in recent years, it is still lagging significantly behind most other financial markets in several key ways.
Perhaps the most concerning way that the crypto market differs from most other markets is the sheer lack of regulation and accountability.
In this industry, anonymity has become somewhat of the norm and is something that is celebrated as evidence of freedom the old ways of doing things. However, while this ability to remain private did help the industry grow in the beginning, with the advent of the first cryptocurrencies, it can be argued that this is now starting to hinder its development.
After all, with many cryptocurrency companies lacking a public list of stakeholders, hiding their company registration details and having no central headquarters, it is difficult to build and maintain a sense of trust with end users, investors and interested parties.
Perhaps the easiest way to see why this can be a problem is by looking at the recent trend of anonymous defamation in the cryptocurrency space.
As of 2019, it is a dangerously easy process to use a wide variety of cryptocurrency news outlets to publish propaganda and spread falsities, which can make it dangerous territory for those not in the know.
While in most other industries this would be quickly met with defamation lawsuits and libel charges, doing so in the cryptocurrency niche is next to impossible—leaving good projects exposed without any means to defend themselves.
Unfortunately, most of these cryptocurrency media outlets are also severely lacking when it comes to transparent publishing practices, which essentially means that anybody with a sufficient budget and a personal vendetta can easily attack just about anyone without fear of legal recourse, since their names will never be associated with the published piece.
While the traditional media industries are dominated by several highly-regarded publications, the same cannot be said for the cryptocurrency industry.
1. Stabilize Values
Instead, there are dozens of smaller outfits, many of which lack a properly defined code of ethics and reporting practices.
Because of this lack of transparency, it is possible to ascribe that much truth to what you read in this niche, without performing significant independent background research—which should be the job of the publications.
Case Study: Karatbars
Despite being arguably one of the biggest success stories of the nascent blockchain and cryptocurrency industry, Karatbars has been subject to more than its fair share of attacks.
Karatbars was initially founded back in 2011 by Senator Harald Seiz.
As an early pioneer in the industry, Seiz recognized a strong need to bridge the cryptocurrency and traditional financial industries, while making gold much more accessible as both a store of value and payment method.
Since then, Karatbars has gone on to release a plethora of products that have achieved international success, including a gold-linked coin — attracting well over 750,000 customers in close to 150 countries in the process.
However, it appears that even industry veterans are not safe from the aforementioned smear campaigns.
Cryptocurrency Regulation EXPLAINED: The GOOD, The Bad, and The UGLY
As of late, a whole host of negative press has been published across several media outlets regarding Karatbars, spreading misinformation, outright lies and other content designed with the sole purpose of damaging the brand.
Of course, the great majority of this content was published by even prominent crypto news outlets without so much as fact checking and was published under the accounts of non-existent authors.
This lack of accountability means that practically anybody with a grudge and some financial sway has the ability to attack just about anyone, using supposedly trustworthy news outlets as their shield.
Who might perpetuate such a smear campaign?
2. Eliminate Fears
In an industry where it is possible to achieve so much with almost no trail, it genuinely could be almost anybody. However, as always, the most likely candidates are scorned ex business partners, major competitors and extortionists.
Karatbars International recently released a detailed statement on who they suspect to be behind the attacks.
Understandably, the threat of being victimized in such a way is likely a strong deterrent preventing major brands from entering the space.
After all, when brand image and reputation are paramount to success, why enter an industry where these could irreversibly damaged at any time?
The Benefits of Regulation
This lack of regulation has also enabled hundreds of scam projects, ponzi schemes and disingenuous projects to thrive.
It has also enabled nefarious individuals to rise to prominence, without fear of prosecution, which has produced negative connotations between cryptocurrencies and criminal activity—a stigma the industry still struggles to shake to this day.
For the great majority of countries, the legal framework surrounding the cryptocurrency industry can be described as sporadic at best.
Case Study: Karatbars
Most countries have placed a major focus on regulating cryptocurrencies themselves, while completely ignoring businesses that are built around cryptocurrencies, such as crypto news outlets.
For the most part, a more comprehensive set of regulations also entails improved transparency from the relevant parties, since these parties can be held accountable for their actions if falling foul of the regulations.
Because of this, some transparency in the cryptocurrency news sector would certainly go a long way to better evangelizing the industry to a more mainstream audience.
This is why the introduction of regulated cryptocurrency exchange traded funds (ETFs) has been widely lauded as a turning point for cryptocurrency industry.
By providing a regulated investment security that tracks the value of Bitcoin, institutional investors are much more likely to invest in the space, which could in turn spur a new wave of adoption.
Similarly, by increasing transparency in the industry, smaller startups, entrepreneurs and non-crypto companies will be more inclined to get a foothold in one of the world’s fastest growing industries.
To get first-hand information from a victim of barely existing regulations, we recently reached out to Karatbars.
In a brief interview, Harald Seiz, Karatbars CEO, commented:
“We assume that a former collaborator of ours is behind this malicious attack on our reputation.
Unfortunately, the lack of regulators in the market provides an ideal environment for those dealing with illegal and morally questionable things.”
“Karatbars calls for more regulations for blockchain and cryptocurrency companies. This begins, for instance, with proper KYC mechanisms, as practiced by Karatbars’ dedicated KYC team,” Seiz said.
Overall, by regulating and bringing increased transparency to the industry, we make it more approachable to businesses of all sizes, while giving those who entered early an opportunity to set the standard and show that further regulations should be favorable, rather than restrictive.
This is a sponsored content directly given by a third-party .
Apart from the featured image nothing else has been changed from the article. It may or may not represent the views of Blockmanity.
Disclaimer: Blockmanity is a news portal and does not provide any financial advice. Blockmanity's role is to inform the cryptocurrency and blockchain community about what's going on in this space.
Please do your own due diligence before making any investment.
Why the Bitcoin and Cryptocurrency Economy Needs to Be Regulated -- and How
Blockmanity won't be responsible for any loss of funds.
Get the latest news on Blockchain only on Blockmanity.com.
Subscribe to us on Google news and do follow us on Twitter @Blockmanity
Did you like the news you just read?
Please leave a feedback to help us serve you better
Ishan GargIshan is a cryptocurrency trader and a journalist.
He is the founder of Blockmanity. He trades cryptocurrencies and holds some but he prefers holding USDT.