- Following the end of TerraUSD, the general consensus among policy makers is that cryptography requires stricter rules.
- Still, Chainalysis’s Todd Lenfield sees opportunities to grow legitimate businesses in fast-moving industries.
Despite the shrinking crypto market, blockchain analytics firm Chainalysis believes that recent fallout offers opportunities to sprout business, especially when it comes to strengthening the industry’s image, especially from a legal perspective. increase.
Following the collapse of TerraUSD in May, several parts of the world have moved to crack down on what they are aware of. Whole body threat For global financial stability brought about by stablecoin and cryptocurrencies. Lawmakers also sought to strengthen consumer protection resulting from dangerous cryptocurrency bets.
Terra ran into a problem when the algorithm’s stablecoin, UST, fell far below its intended one-to-one equivalence with the US dollar due to a serious design failure. This has resulted in a substantial increase in prices.Death spiral‘When the pegs are released.
Other stablecoins such as Circle’s USDC and Tether’s USDT claim to be backed by a basket of reserves such as cash, commercial paper, bonds and cash equivalents.
Todd Lenfield, Country Manager for Chainalysis in Australia and New Zealand, told Blockworks in an interview that regulations will continue to evolve.
“I don’t think everyone is avoiding it, but I don’t want to oppress the industry either,” Renfield said.
The UST decline has surprised many borrowers, especially those who have taken unsecured or unsecured loans to take better advantage of Terra’s ecosystem.Those borrowers were forced to swallow margin claims and liquidations that left part of the industry. Largest lender Filing for bankruptcy..
Bitcoin, the Bellweather cryptocurrency, has been hit since it fell nearly 50% since Terra began blinking signs of capital flight to $ 20,000.
At the end of last month, EU policy makers agreement Has been debated for a long time Cryptocurrency market (MiCA) A bill that seeks to establish rules on how to treat digital assets, including stablecoins, within blocks.
MiCA is trying to identify where existing financial services laws are inadequate, especially how to crack down on stablecoin and totals. Reserve These projects should be at hand. The bill also seeks to curb money laundering, requiring non-compliant service providers to be listed on the public register and hoping to identify them as malicious individuals.
Chain analysis executives see this as a time of growth
While the effects that regulations have been able to achieve to prevent the current perceived transmission across the market are controversial, the general consensus among policy makers is that cryptography requires stricter rules. , Quick.
Regulatory concerns have also focused on the old issue of washing unfair profits and avoiding sanctions, including the avoidance of Russia’s sanctions by Western allies resulting from the February invasion of Ukraine.
Jason Allegrante, Institutional Investor Fireblock’s Chief Legal and Compliance Officer, told Blockworks in an email that it is important for the cryptocurrency industry to clearly define its positive use cases.
“One of the reasons for this is that we’ve done a pretty poor job as an industry explaining positive use cases for blockchain technology, including use cases that actually drive the interests of law enforcement agencies,” Allegrante said. I am saying.
He continued. “The second reason is the recognition that these markets are largely unregulated and operate without meaningful oversight. Ultimately, MiCA. [and others like it] Responsible for the industry helps to minimize these concerns. “
However, according to Chainalysis’s Lenfield, there is a silver lining somewhere between the ominous dark clouds.
“When the market is down, we’ve always said it’s an opportunity for our growth,” Renfield said. “Cryptocurrency businesses like traditional exchanges offer different types of services, add value to their customer sets like any other business, and look at what to do in the downcycle. “
Chainalysis’s main marketing focus is on helping law enforcement agencies in attempts to catch illegal actors by analyzing blockchain data and mapping addresses belonging to criminals.
“This space moves so fast that we need to pivot and think about how to deal with the changes that occur in the blockchain space,” says Lenfield. “When it grows and we want people to get involved, we want to build that trust, but we need to do that by being knowledgeable and applying information sharing and regulations that help.”
Fireblocks’ Allengrate agrees to add a global principle-based consensus on specific norms for doing business, including anti-money laundering measures. Must be incorporated into the latest projects in the industry.
“Some companies do this better and more effectively than others, and those that can adapt will often thrive,” he said. “Regulations bring clarity and stability. A stable market with clear rules for doing business often becomes more attractive to new entrants.”
Deliver the day’s top cryptocurrencies and insights to your inbox every night. Subscribe to Blockworks’ free newsletter now.