News

Protections for consumers in the crypto trading market

Crypto trading has become an extremely popular venture over the past few years. There are numerous crypto exchanges in the market, offering traders safe, secure, and transparent services. That said, the cryptocurrency market is still among one of the riskiest ventures. Sometimes, it gets a bit hard to know what to do to stay safe.

Still, there are numerous things that protect investors from the harms of the market. Although risks are high, many people still decide to trade cryptocurrencies and they do so because of all the exciting offerings that this market has.

The recent UK regulator crackdown on Binance, which is one of the largest crypto exchanges globally, is another reminder that some might have a hard time recovering their funds if something goes wrong. Sadly, when it comes to the official burdens and protections, the market still has a long way to go. At the same time, this does not mean that trading cryptos should be avoided.

The fast pace of development

The speed that the market has developed further exceeded the ability of regulators to weigh in and react properly. The majority of the financial regulations around the world were created on the experience of the 2008 financial crisis when the crypto market was not even a thing for the larger society.

The thing about the crypto market is that it does not easily fit into the regulatory framework of the existing agencies. Recently, the managing director of the financial advisory service, OpenMoney said that when it comes to the protection of consumers in the crypto market, a very quick answer is that there is not such a thing.

As he said, regulatory agencies around the world are still very much struggling to define what crypto really is. For example, in the United Kingdom, the Financial Services Compensation scheme does not cover crypto trading. For other assets, this insurance scheme can compensate consumers for losses up to £85.000.

The same goes for European regulators and laws. There simply are not enough mechanisms to guarantee the safety and security of crypto traders. As for the United States, here, the regulatory agencies license the crypto brokers and exchanges as money transmitters and not as investment institutions. Because of this, the investors in the crypto market are not protected by schemes such as Federal Deposit Insurance.

This raises a lot of questions for crypto investors. As there are little to no guarantees of safety in the market, there are many investors who are having a hard time deciding whether to join the market or not. While there are different types of schemes to guarantee the safety of investors, there are no such schemes for crypto traders.

An increasing number of crypto traders

Although there are some risks associated with the crypto trading market, there still are many people who decide to invest in this market. The majority of investors in the crypto market are newer, tech-savvy generations around the world.

There are many things that attract investors to this market, be it higher volatility, a high level of privacy, or many other things. Among the main reasons why so many people decide to invest in cryptocurrencies is how easy it is to become part of this market.

There are numerous crypto exchanges in the market that offer traders easy access to the market. These exchanges offer traders the ability to buy, store, and sell cryptocurrencies at the same place.

But, further popularizing the market is the fact that almost anyone can become part of it. Even people who do not have enough time to analyze the market and trade cryptos are able to invest in the market thanks to the automated cryptocurrency trading bot, which offers traders the ability to rely on robots with their positions. These robots are doing almost everything for traders, which saves a lot of time.

Room for growth

Although the popularity of the market increases, there still are many challenges that crypto trading faces. One of the biggest challenges that the market faces is for regulators to decide how to protect consumers.

However, aside from consumer protection, there are other challenges as well. Many people have recently come forward to discuss the impact of crypto mining on the environment. Recently, Tesla announced that it would halt receiving payments in bitcoin due to the environmental concerns around crypto mining.

Later, Tesla CEO Elon Musk announced that the company was ready to continue accepting Bitcoin payments if the miners started using clean energy. Also, the Chinese government in June did a massive crackdown on the Bitcoin exchanges in the country. Authorities of China said that the main reason was the environmental impact of mining.

That said, crypto trading remains to be very popular around the world because of many reasons. The number of crypto traders is increasing every day, and as it happens, the regulatory bodies might be required to step up and get closer to the pace of crypto development.