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Next year may become the global regulator for the crypto segment

Next year may become the global regulator for the crypto segment
Written by Arindam
Next year may become the global regulator for the crypto segment

Global market regulators are likely to launch a joint body next year to improve regulations related to cryptocurrencies. There has been a huge sell-off in the crypto market in the last few days. The price of bitcoin, the largest cryptocurrency by market capitalization, has lost nearly 20 percent this week.

The Reuters report quoted Ashley Alder, head of the International Organization of Securities Commissions (IOSCO), as saying that the boom in digital currencies like bitcoin is among the key areas of focus for authorities, along with areas such as coronavirus and climate change. “If you look at the risk, it is very high and needs to be discussed at the institutional level,” he said. He cited cyber security and lack of transparency as the key risks of the crypto segment. Regulators have previously expressed concern over high volatility in cryptocurrencies.

Alder, who also heads the Hong Kong Securities and Exchange Commission, said there is no global regulator for the crypto market. A decision in this regard can be taken by next year. After the steep fall in the price of the stablecoin TerraUSD, the chairman of the Senate Banking Committee in the US has urged US lawmakers to tighten crypto regulations. Stablecoins are cryptocurrencies that attempt to link their market price to a reserve asset such as gold or common currencies. These are more commonly used for digital transactions in which virtual assets are converted into real assets.

USD Coin, Tether and Binance USD are some of the popular stablecoins, which are pegged to the US dollar. Stablecoin, a rapidly growing version of crypto, has emerged as a major medium of exchange. It is often used to remit funds on behalf of traders. It is easy to exchange major stablecoins for bitcoin or other cryptocurrencies. Other stablecoins have reserves in common assets but TerraUSD maintains it through an algorithm that controls supply and demand using Luna, another balancing token. TerraUSD, touted as an algorithmic stablecoin, broke its 1:1 link with the dollar on Tuesday.

(This news has not been edited by NDTV team. It has been published directly from Syndicate feed.)

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