This week, the U.S Securities and Exchange Commission said it would expand the team that oversees cryptocurrency, so it can better monitor for fraud. This is just the latest regulatory step directed at crypto trading markets; and it’s unlikely to be the last.  

As someone that has developed algorithmic trading solutions aimed at retail investors, allowing hundreds of thousands of people to invest millions in crypto, I welcome these developments. Many crypto industry leaders (and some members of the SEC itself ) worry about, or even oppose, regulation of the space, but it is the only way to create a market that truly serves the public, giving them opportunities to make money while ensuring there is also the proper level of protection.

But to finally end the Wild West nature of crypto trading, regulation also needs to go beyond fraud and enforcement measures. There needs to be a dedicated effort to thoroughly regulate crypto trading in order to guide the development of an asset class that truly serves people.

When it comes to crypto trading, we need the same types of safeguards that have developed in equity and other mainstream markets over the years, including the official halting of trading in single assets or on markets overall (as happened on 9/11 and during the early days of the Covid pandemic). The truth is that no one gains in the long-term from these wild swings, and investors need breathing room during exceptional events. The public also needs to feel secure that there is proper supervision of markets of trading in order to feel comfortable participating. 

While 21% of Americans have used or invested in crypto, that is still only a minority of the population. Implementing organized market safeguards would surely draw more into this emerging asset class. Those increased numbers alone would naturally lead to less volatility–also a main concern and challenge when it comes to crypto markets.

Regulation, regarding fraud or anything else also needs to include not just enforcement measures, but steps about how companies and platforms can comply. This is currently missing from the piece-meal efforts of U.S. regulatory officials. Rather than helping to develop standards and best-practices for everyone, individual platforms are hit with fines and investigations. As a result, crypto firms face a lot of confusion over what needs to be reported or registered, forcing companies to limit their offerings in order to be on the safe side. This is not an environment that is conducive to innovation and further development of the sector.

The SEC and other relevant government and regulatory bodies also need to release an overall plan specific to the crypto industry so the industry — and consumers — can know what to expect and plan accordingly. This will spark more development of the sector, bringing more leading institutions on board and developing crypto as an asset class. It would lead to the development of all the necessary institutions and practices that surround mature markets, like analyst coverage, and algorithmic and other sophisticated trading methods that allow people to invest in smarter ways.

We already see this maturation slowly happening today, with Fidelity's recent announcement that it wants to offer Bitcoin in its retirement-savings plans. But painting a vision for future regulation would speed this up and bring more financial opportunities and inclusion to retail investors.  

(Anna Becker is the CEO and Co-Founder of EndoTech where she leads the AI/ML teams.)  

Cryptocurrency Criminals Hooded shadowy figure in front of code Photo: Richard Patterson www.comparitech.com/flickr.com