By: Marko M. Hafez, Co-Founder and President
It's time to review: what do we make of the decision from crypto exchanges Binance, Kraken and ShapeShift, and others, to de-list the controvertial coin Bitcoin SV (BSV)? While many have said this is the right thing to do, the entire story of BSV goes to show that the crypto market has a major flaw: there are no real systems in place to protect investors.
Drama surrounded BSV from the start. The alt-coin’s founders claimed that BSV represented the true vision of the fabled Satoshi Nakamoto (hence Bitcoin Satoshi Vision, or BSV), and the coin itself was created out of a hard fork in the original bitcoin blockchain dating back only just a few months, to November 2018.
From a reputational standpoint, BSV was a problem from the get-go. Its founder Craig Wright have been involved in numerous lawsuits and claims to be Satoshi Nakomoto himself, and many view Binance’s decision to de-list as a wise move that distances itself from an unprofessional and politically divisive coin.
Meanwhile, bitcoin investors who bought and traded BSV were caught by surprise and hung out to dry.
This latest growing pain for the crypto community is just another sign that to truly really grow and become widely accepted, crypto must leave some of its founding Wild West rowdiness in the past and embrace a more regulated future.
If cryptos were traded like a security on the regulated stock market, investors would be protected by rules and mechanisms developed over decades of trial, error, and investor exploitation.
Some of the most important rules are the ones that guide which assets get listed in the first place, and what a reputable stock exchange has to do in order to de-list them. It’s all about transparency and predictability.
In order to be listed, companies need to file a detailed prospectus that provides investors with a clear idea of what they’re buying into. It’s unlikely that BSV would have met that requirement. At the same time, stock exchanges can’t just unilaterally de-list an asset because they don’t like the company in question - they must follow a process that gives investors time to understand what is happening and react accordingly.
Which is to say, the NASDAQ can’t de-list a company simply because its CEO made some controversial comments. The NASDAQ and other regulated exchanges are held to a higher standard that ensure decisions are made based on fiscal compliance.
With these risk mitigation measures in place, not only do investors have a better idea of what they’re getting into, but other protections become available to them as well. For instance, regulated and licensed financial institutions are much less likely to get hacked like Mt. Gox or simply collapse like Quadriga, and in the (extremely) unlikely event that they do, their risk-based approach often means that insurers are comfortable providing coverage against those types of losses.
Unfortunately, there simply hasn’t been enough insurance coverage to go cover the crypto market in its entirety.
Blockstation, a Canadian FinTech, is ready to bridge the gap between crypto and traditional institutions like regulated stock exchanges and licensed brokers. Over the past four years we’ve developed a best-in-class trading platform for bitcoin, Ethereum and digital assets like security tokens, partnering with global stock markets to bring the regulated, insured exchange of cryptocurrencies to mainstream investors.
Our live pilot with the Jamaica Stock Exchange is now open, welcoming investors all over the world to sign up and begin trading.
The result is that investors who wonder, “Is bitcoin safe?” now have a predictable, reliable and compliant environment to buy and sell cryptos with confidence.
Is the Wild West of crypto due for a regulatory makeover? Let us know on social media with the hashtag #Blockstation.