The crypto industry will only benefit from regulation

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Since the emergence of Bitcoin in 2009, cryptocurrencies have become widespread. By 2022, the market included at least 10,000 tokens with various properties: well-known mainstream coins like Bitcoin and Ethereum, stablecoins with a value pegged to fiat currencies, meme coins, and various altcoins that power different projects.

Cryptocurrencies provide options for fast and inexpensive money transfers (including cross-border ones), have limited use for payments, and can be used as a store of value if not considering extreme volatility. However, the most common use for cryptocurrencies is speculation: the market has many players, from individuals to hedge funds, aggregating billions of dollars worth of crypto assets.

Crypto enthusiasts promote blockchain-based projects as alternatives to the traditional financial system with no need for intermediaries to hold and transfer one’s funds. Hence, the lack of a regulatory framework is considered a privacy-preserving feature. However, it comes with a price: investors in crypto projects are not protected at all, while the lack of regulation over crypto wallets and transfers made it a tool of choice for all kinds of criminals and money launderers.

One reason to regulate: widespread fraud

Traditional markets are regulated for a reason. There are organizational requirements for public offerings, strict technological standards to ensure the secure transfer and storage of assets, and anti-money laundering and counter-terrorism financing compliance to prevent criminal money from entering the financial system.

In the crypto industry, fraud is widespread. By 2024, the Worldwide Cryptocurrency Heists Tracker, which documents several types of cybercrimes, reported $10,5 billion in stolen crypto assets in 879 cases (which will roughly equal $50 billion in today’s prices). Those heists included exploits, hacks, flash loan attacks, reentrancy attacks (which utilize vulnerabilities in specific smart contracts), price manipulations, third-party attacks (which use the infrastructure of a pa

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