Cryptocurrency aspires to be a key player in the financial world, but this is not something that can happen in the current crypto environment. Crypto exchanges and crypto custody setups, hold cryptos worth millions of dollars. Crypto investors should be aware of the risks involved with, these crypto custodians offering no degree of transparency.
The crypto sector is really not transparent, and the amount of indebtedness that the various exchanges and custodians have provided is unknown. It is important that crypto does not recreate the same destructive path that, the traditional financial industry created in 2008.
With the current structure, crypto investors are unable to tell if the industry’s service providers are solvent or not. There is no requirement to disclose indebtedness and therefore no one is doing so. Cryptocurrency exchanges and firms should publish their proof of reserves. It was way back in 2014, when any such revelation was last made by crypto exchanges. This explains why trust in these crypto firms are not very high.
Taking heed from conventional financial transactions, we should aim for crypto legislation that covers every aspect of crypto trade. The crypto industry needs to prove that it deserves, business and trust from investors. Crypto audit firms with clear operational guidelines, should be recognized by crypto legislation.
There remain a concerning number of ‘IOUs’ that are underpinning key segments of the crypto ecosystem. Analysts estimate that approximately 25% of both Bitcoin and Ether (ETH) are held in third-party custody, while 75% are self-custodied, the entire stablecoin sector is built on the basis of IOUs. The industry is not as self-custodied as would be thought. This is why it really is important, as an industry, to step up and start disclosing whether the exchanges and custodians are in fact solvent.
One thing that should be implemented is the right of the investor to retain control over his/her private keys – in cases where their ownership of the crypto assets is outright.
Glitzkoin Business Development Manager Lila Ruzaini had this to say, ‘… it is important to develop crypto laws that, are largely accepted across nations … uniformity is ideal … and while we do this, let us make one set of laws for all cryptocurrencies and all crypto firms. As of now, governments and investors, seem to be segregating Bitcoin and ETH as being extra special. A wider crypto investor base and markets that actively trade a wider range of cryptocurrencies, are absolutely essential’.
GLITZKOIN: Glitzkoin is developed on the Stellar blockchain. The project includes the multifaceted GTN token that currently trades actively on 3 crypto exchanges (Cointiger, Stellarport and Dobitrade). Glitzkoin makes a direct connect to the multibillion dollar diamond industry. The project is promoted by second generation diamond veteran Navneet Goenka, it aims to improve productivity and market scope for the glittering industry. A comprehensive diamond trading platform (DiaEx) is part of the project, it supports both B2B and B2C trade in diamonds. As mentioned above GTN is traded by crypto traders on three exchanges, it is also designated as the mode of payment on DiaEx.