A lot has changed with respect to the mainstream adoption of cryptocurrency since the first-ever crypto asset, Bitcoin, debuted more than a decade ago.
Aside from the enormous growth in the number of digital assets, of which there are now over 7,500, one thing that has also drastically evolved is the regulatory approach being adopted across nations, each working to maintain sanity and order in the crypto-finance space.
While some countries have already embraced the use of popular cryptocurrencies like Bitcoin, others remain reluctant to do so, in some cases choosing to clamp down on its application instead.
Despite attempts to boycott regulations as much as the interference of centralized systems, it appears that the eventual success of cryptocurrencies still greatly relies on regulation.
So far, a number of crypto enterprises have sought ways of staying decentralized, while also being regulated at the same time; knowing this is nigh impossible, Lennix Lai, director of OKEx thinks otherwise.
OKEx is a cryptocurrency exchange platform based in Seychelles, and is used for trading various cryptocurrencies. In an exclusive interview with DailyCoin, Lai, who currently presides over international development at OKEx, shared his own opinions about the current and future outlook of the crypto regulatory landscape.
While it has been dubbed the “world’s leading asset platform,” OKEx offers a suite of diverse services, ranging from Spot/P2P trading to liquidity pooling and decentralized cloud services, to security of funds, collateral-based lending and borrowing, and much more.
Cryptocurrency’s Regulatory Landscape
Speaking about the existing regulatory landscape of the crypto market, Lai claims that times have changed and, unlike some years ago, he now feels more comfortable talking about crypto regulations.
"Back in that time, there was no regulation, so we kind of stepped into grey areas that were either partly regulated or unregulated. As a result, when we tried to engage the regulators, it was extremely difficult for us, simply because the industry was so little and we didn't have much to say either. Likewise, the regulator has no idea how to regulate this kind of industry; truth be told, a few of them were scared,”
However, several years on from then and a lot has changed with regards to the mainstream adoption of cryptocurrency, as well as the regulatory stance of most nations. According to Lai, crypto’s development, especially that of Bitcoin and Ethereum, has drawn attention from governments, who are now paying more attention than ever before.
“Regulation Brings Clarity and Comfort”
While the approach taken by each nation’s government varies, Lai opined that this growing attention, which also comes in the form of regulation, is necessary, considering that it brings with it the clarity and comfort required for the overall implementation and application of crypto.
“When you consider where we were a few years ago, it appeared that we were going nowhere. Now we have more clarity. Clarity on whether the government or regulatory bodies are supportive of cryptocurrency. Or, in worse cases, if they want to ban it completely,”
On the other hand, some government officials take the approach of: “hey, let’s start small. Let’s ask some alumni we know. Let’s try to collaborate.” This kind of approach, according to Lai, provides clarity on how to engage with regulators, as well as how to approach the next line of action, development-wise.
Although regulations provide clarity and comfort to the crypto-verse, they also make scaling a project much more challenging than it would otherwise be without them. The reason for this, according to Lai, is that, aside from the enormous financial investment, it also takes a great deal of effort to establish which region to penetrate.
Regulators Endorsing The Future of Crypto
When asked about the future of cryptocurrency, Lai opined that there will be several levels of endorsement from the regulators, however, the primary ones fall into three categories.
The first level is regulators being “extremely supportive;” Lai explains that regulators will try to establish separative laws specifically for the crypto industry. In regions where this is the case, it becomes safe to say that they are experiencing the highest form of regulatory endorsement.
The second level is simply “supportive,” where no real action is taken by the government, however, there are efforts geared towards trying to fit crypto access into the existing regulatory regime.
The third and final level has to do with an “extremely unsupportive regulatory regime.” In most cases, regions that fall under this category are very hostile and non-supportive towards the crypto industry.
While each region tends to respond to each level differently, it’s hard to predict what the eventual mainstream adoption of cryptocurrencies will look like. The best part of all of this, according to Lai, is that, even if various countries were to put strict measures in place to regulate the crypto space, they can still be supportive at the same time.
On The Flipside
- Although regulations bring clarity and comfort, it tends to make the scaling process of a given project much more challenging.
- Regulation may come at a significant cost, particularly when it comes to employing legal counsel, which is typically not cost-effective for startups.
Why You Should Care?
The crypto-verse is still facing a major dilemma between staying fully decentralized, yet regulated. Sadly, it is hard to achieve truly decentralized finance in an absolutely regulated environment, and as such the future of cryptocurrency is still very much dicey.
Watch the full interview here: