By Egor Gurjev, CEO at Playkey

The past few months have seen a volatile crypto market, resulting in many interested investors unaware of what steps to take next. Heavy investment? Release assets with haste? Continue with the key players or seek out alternatives? Confusion culminated with a number of UK and US banks taking the measure of banning crypto purchases using credit cards, to avoid the possibility of eager investors racking up irrecoverable debts.

For a large number of crypto enthusiasts, this will have a very real impact on their investing habits. A recent poll found that 18% of bitcoin investors, do so using a credit card, and 20% of those have yet to pay off the balance1.

You may think it goes without saying, but it is of vital importance to only invest money that you can afford to lose. Recent years have produced many, genuine success stories in the crypto space, with some keen-eyed investors making a serious amount of money, but the fact remains that it is an arena that carries with it a great deal of risk. As such, I welcome the move by some banks to ban credit card purchases. It is a step with two key benefits: 1) Retail investors will be protected from the possibility of losing money that they wouldn’t usually risk, and 2) Banks will avoid seeing excessive debts build up.

Unfortunately, a consequence of so much money being made, the amount of scammers looking to make a quick buck is high. I’d say it is highly likely that over half of the crypto projects we see come to light are in fact a scam, due largely to a lack of regulation in the space. It is a certainty that if regulation for crypto was as complete and careful as that of the global financial authorities, the bulk of cryptocurrencies that are seeking a name for themselves would fail to come to market in the first place.

It is due to this, that complete and careful research is so essential before parting with any investment. Ask lots of questions, what am I investing in? Is there already a physical product or prototype I can inspect? Who is the team behind the company? An online profile, claiming allegiance with a highly respected figure can be easily forged. How long in the works has the project been? If based on a spur of the moment idea, with no careful, lengthy consideration – should you definitely be investing your wealth in to the idea?

Regardless of the unpredictable nature crypto markets have so far displayed in 2018, there are indicators that the market is growing and developing at a steady rate. There continues to be a good deal of businesses opting for tokenisation to raise capital, whilst the interest of investment in cutting edge business ideas continues to grow.

Across the globe, we are seeing moves to embrace the market. Japan already accepts and recognizes Bitcoin as a verified method of payment. Switzerland is at the forefront of creating favourable conditions for blockchain start-ups and cryptocurrency turnover. The Crypto Valley Association is an independent, government-supported, association operating in Switzerland, and they are planning to develop legal regulations for conducting ICOs.

Laws in the USA are generally friendly towards cryptocurrencies, depending on the state and type of operation. However, raising capital via an ICO are vigilantly regulated in the USA, companies that release tokens must register transactions, as must the exchanges that facilitate the exchange. This has lead to the first ever case of ICO fraud which was filed against ReCoin and DRC World, these projects, despite a lot of sizable promises, failed to actually do anything.

Alternatively, ICO regulation doesn’t yet exist in the EU. The European Securities and Markets Authority warns ecosystem participants of the risks. In addition to the general nature of ICOs, the regulator says that certain transactions may not be in the sphere of EU legislation, meaning that investors will lose additional protections.

However, the increase in regulation and security is a trend that looks likely to continue, what we are seeing is simply a case of regulators upping their focus on the activity, with the intention of protecting both businesses and the investor community from making irrecoverable losses.


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