Exchange Platform’s Fake License: Is the Industry Regulated Enough?

The cryptocurrency market has experienced exponential growth in the past decade. Cryptocurrencies have evolved from niche assets into other mainstream investments. Likewise, the blockchain technology backing them has the potential to break into various industries.

Consequently, crypto platforms, including exchanges, wallets, and casinos, have emerged to match the growing demand and adopt this new craze. One of the concerns that have been raised in this fast-growing industry is the need for regulation and licensing. But does the industry have effective regulations? Let’s find out.

How Effective Are the Regulations Placed on Crypto Platforms?

In a recent development that has sent ripples through the cryptocurrency space, a crypto exchange, Bitspay has found itself under scrutiny for reportedly using false license data. The crypto exchange company suddenly removed all traces of its licensing information from its website after being questioned about its legitimacy.

The exchange company in question claimed to hold a license in Estonia and was regulated under Estonian law. However, following some questioning by Cointelegraph, the company was found to have displayed false data, sparking questions about the effectiveness of the industry’s regulation.

This recent incident only further reveals that while there are legitimate businesses in the crypto industry, bad actors are also looking to take advantage of the industry’s decentralized and relatively unregulated nature. It also highlighted how easy it is for fraudulent actors to operate within the crypto industry, having a field day with the lack of stringent regulations.

This event shows that you cannot blindly trust these companies and that you must take time for some due diligence of your own. It goes on to show a need for more open and stringent regulations as they serve as a protective agent for you as you trust these platforms with your digital assets.

What Is Your Responsibility as a User?

Regulatory bodies help to establish and enforce rules that would guide the cryptocurrency industry. However, as a user, you also bear a significant responsibility in protecting your crypto investments. There are some measures to take to ensure you are dealing with only properly licensed crypto platforms.

One such measure is to verify licenses thoroughly. Check if your crypto platform holds the necessary licenses and permits in its jurisdiction. Crypto regulations differ in each country around the world, so research the specific requirements.

Before investing or depositing any funds, read as many reviews of each platform as you can. For instance, there are a number of user reviews of bitcoin casinos and feedback online that can help you choose the right crypto casino if you’re looking to gamble with crypto. A crypto platform with a solid reputation from trusted reviewers is more likely to be safe than one with little-to-no positive user feedback. Similarly, when looking for an exchange platform, look for news about any past security breaches. If there have been some serious ones, you’ll want to stay well clear to keep your funds safe.

Regulations in different countries are evolving. Ensure you stay informed on current regulatory developments in the cryptocurrency industry while using only reputable sources to get information about these crypto platforms.

How Important Is It for You to Use Only Properly Licensed Crypto Platforms?

Regulation of crypto platforms plays a pivotal role in protecting you from scams and frauds. Take a look at why you should confirm that the platforms you use are properly licensed:

Protection of Investments

An important reason you should confirm the licensing of a crypto platform is to protect your investments. By using a licensed platform, you have the option to take legal remedial action in case of disputes or fraudulent activities.

Licensed crypto exchange companies are subject to regulatory actions such as audits, know-your-customer (KYC) regulations, and adherence to security standards. More so, licensed platforms are typically required to enforce firm security measures to protect their users’ assets. Such measures may include encryption and cold storage for cryptocurrencies. These measures reduce the risk of fraudulent actions in dealing with your investments and protect you from substantial avoidable financial loss.

Legal Compliance

Governments and regulatory bodies worldwide are watching the crypto industry with eagle eyes. There are stricter rules and penalties for unlicensed activities in place. Crypto platforms such as casinos and exchanges that operate with false or improper licenses will eventually find themselves on the wrong side of the law. Engaging with such platforms may expose you to legal risks. Ensure that the activities of whatever crypto platform you use align with the legal framework of their jurisdiction.

Transparency

With a legally licensed crypto platform, you can be sure of transparency. Licensed platforms are obligated to disclose essential information to users, such as details about their license, terms and conditions of service, fee structures, and data privacy policies. Such transparency will help you make informed decisions about the platform you choose.

Great Consumer Support and Recourse

Suppose an issue or dispute ever comes up between you and a licensed crypto platform. In that case, you can have access to regulatory bodies and ombudsman services that can help resolve your problems. Such channels provide backing and recourse for you in cases of disagreements with the platform. However, unfortunately, with unlicensed crypto platforms, you would have to deal with this yourself. Dealing with unlicensed crypto platforms puts you at risk of getting little to no external support in cases of disagreements.

Conclusion

As the crypto industry continues to adapt to regulations, you must prioritize due diligence when choosing a platform to use for your crypto activities. Ensure to confirm the licenses of your chosen crypto platform and perform your responsibility in making sure only licensed crypto platforms thrive. This would help you and other people in the crypto community to minimize risks and ensure a safer crypto industry.

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