The Need for Better Investor Protection and Investment in the Crypto Industry
The crypto industry surged in popularity in early 2021 as the world was recovering from COVID-19, and the rise of the alternative asset class has piqued the interest of investors. From various issuing of new coins to the world of NFTs all were happening in the crypto space.
There are several active business individuals and key billionaires who played a massive role in the crypto mania party. However, this bubble met with a burst when it was revealed that one of the largest crypto firms that was running the race to regulate the market was itself dealing with fraud and financial mismanagement.
The scam of FTX has shocked the crypto investment community, and many people have shifted towards a more secure and regulated asset class that has a tangible value. The catch over here is that this crypto fraud is not new, and many major successes in the space met with an alternative fraud that keeps investors away from the market.
Things Industry Needs to Bring for Better Investor Protection
Several things can be taken into consideration by the key pioneers in this sector. For example, the company like Coinbase, Ava Labs, Block, and many other key industry players need to come for a unified market structure that can bring back the investor’s confidence and can help the companies in the space to grow.
The industry pioneers can advocate regulations or push the idea of tax audits through cryptocurrency tax lawyers and another set of compliance that can increase transparency and bring clarity to the minds of the investors.
- The Role of Fraud Prevention
The first task that a person can do is to check for fraud prevention, and for that, one needs to stay associated with the financial guidelines of the capital market. The industry can then morph and bring a similar type of guideline for the crypto companies and coins to engage and anchor the investor’s trust.
2. Having Clear Disclosure Standards
The next part that a person can do is to keep a completely clean and easy-to-understand disclosure structure that will guide the investors about the key risks of the market before they put their capital.
Disclosure is one such key element that will eventually help the investors to know more about a particular investment class, and based on that, one can make the investment decision.
3. Defining a Clear Set of Legal Framework
A legal framework is mandatory to make an investment class suitable for investors. Investors who are managing huge sums under their AUM can then only find the right means and method to invest in this space.
For example, a personal tax lawyer who will help an individual fight any discrepancies can guide the person about the crypto tax once it has more set of criteria upon which one can file for their gains and losses in their crypto account.
Hence, a proper legal framework is effective for regulators like the SEC and also will provide clarity to serious investors. Solving these issues can bring more attention to the market and end the draught of the crypto industry.
