Some may be ignorant of the influence and power of cryptocurrency exchanges – purportedly – ​​on the world’s decentralized cryptocurrency markets.

Especially with the majority of trading volume in the cryptocurrency industry being from small traders and speculators using centralized cryptocurrency exchanges like Binance, these platforms are the reason that pushed prices to record highs in late 2017 by attracting enthusiastic investors.

Note that the role of cryptocurrency trading platforms is very important because if there are no trading platforms and they do not provide a choice at all where users can overcome the difficulties of dealing with decentralized platforms, or enter the market using cash, the cryptocurrency community will remain as a small community of technology professionals information exclusively.

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The compromise is clear: centralized cryptocurrency exchanges that mimic standard exchanges are driving the returns of the crypto market, but at the same time the crypto market sacrifices its original vision (such as decentralization).

This is obvious to traders, but regulators have another view. And for a long time, there have been cryptocurrency trading platforms that claim to be fully systemic. However, the authorities have traditionally been unsure of how cryptocurrency exchanges are to be classified and did not want to risk creating rules that discourage innovation.

This change is evidenced by the recent settlement between The US Securities and Exchange Commission (SEC) and Zachary Coburn, founder of EtherDelta. Coburn recently agreed to pay more than $380,000 to the US Securities and Exchange Commission (SEC) for being an unregistered platform, even though he left EtherDelta a year ago.

Coburn should know that it could be a target, especially in light of comments from the Securities and Exchange Commission earlier in the year regarding how the agency intends to define ERC20 tokens — the only assets listed on the EtherDelta platform.

The EtherDelta platform did not differentiate in terms of the listed digital tokens, which was the impetus for the SEC’s intervention. In June 2018, the chairman of the board, J. Clayton, was the first to say that currencies that mimic fiat money like Bitcoin and Ethereum are not securities, and that other tokens that act as digital assets are securities.

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The US Securities and Exchange Commission (SEC) reverse move against EtherDelta is just a glimpse into the entire cryptocurrency exchange industry. But does that mean it’s over? Not likely.

Investor’s appetite for cryptocurrency has not paid off

The regulatory landscape has always been bleak for Bitcoin enthusiasts and activists, and the trader now has a high tolerance for negative news, market rumors and what is known as FUD – fear, uncertainty and doubt.

Although volatility has decreased significantly since the beginning of 2018, the 24-hour trading volume remains flat at around $18 billion, and has been flat since April.

As an asset class that is highly sensitive to social media and news, it is also wise to search Google for crypto-related terms.

Invisibly, the Google Trends chart reflects the price of the cryptocurrency market quite well, so it is a good thing that searches for the word “crypto” held it strong during the second half of this year. A large part of the unfathomable enthusiasm for cryptocurrency exposure is that technical trends have indicated that the market is a potential bottom.

Other commodities in traditional markets such as Stellar, Ethereum and EOS have also largely stabilized, leading many to believe that the consolidation is over. This raises the possibility of a sharp downside dip before the uptrend begins, reflecting higher past highs.

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There are more cryptocurrency trading platforms than ever before

The rise in the number of cryptocurrency exchanges being launched also indicates their indifference to the positions of the US Securities and Exchange Commission (SEC).

Hundreds of newcomers like Liquid, BitForex and HotBit are stepping forward even though they now know that barriers to entry have increased, as well as many decentralized cryptocurrency trading platforms. It helps that examples like EtherDelta can easily be avoided: if you provide a marketplace for digital assets, simply register with the SEC or pursue the exemption by consulting with the authority.

EtherDelta was also decentralized and wanted to tell the new platforms something else: it didn’t matter if the platform was operating like a centralized organization or as a decentralized peer-to-peer (P2P) network. The creator can always be held accountable.

As cryptocurrency and cryptocurrency services become more and more popular, it is also clear that operating the platforms is a very profitable venture. The overhead associated with blockchain is much lower when compared to traditional asset trading venues, and clients from all over the world can easily provide the service.

An enterprising individual (willing to invest) can start and launch a new trading platform based in Malta, Japan, or any other regulated spot from abroad. However, if they serve clients in the US, they are likely to face the wrath of the US Securities and Exchange Commission (SEC).

However, look at the settlement reached by Coburn between EtherDelta and the SEC. With a price tag of just $388,000 in penalties, it quickly became very easy, especially when considering that the richest people in the crypto world are the owners of the trading platforms and not the talented or timely investors.

Investors warned

Unregulated trading operations pose a financial threat to traders everywhere, and although familiarity with cryptography and the ability to manipulate the technology are enough to avoid risks, sometimes it is not possible. but Why are unregulated cryptocurrency exchanges dangerous?

Regulated counterparts must maintain appropriate trading conditions and use tools that help protect investors and individuals.

A quick crash can happen when liquidity suddenly disappears, and it happened earlier this year on GDAX when the Ethereum stock fell from $320 to 10 cents (and then back up) in just a few seconds.

Unregulated trading platforms also allow for cheating, coordinating pump and dump schemes and drawing tape without giving it away. Market manipulation is a crime but without a regulator to enforce it, users cannot get their capital.

In addition to popular methods such as two-factor authentication, experts have a few other tips on how to protect investors from their portfolios. .

It is clear that while choosing a safe and regulated trading platform is vital, cryptocurrency traders are still largely ignorant when it comes to protecting their funds.

However, the SEC’s intervention efforts are good news for precisely this reason. As the quality standards of the approved platforms are expected to rise, which will benefit the users.