Harry Zhou who worked as the former general counsel and compliance officer for Huobi US talked about the recent report by the New York State Attorney General pertaining on crypto exchanges. The crypto exchanges were tagged by the report being used for price manipulation.
Harry Zhou was responsible for helping New crypto exchanges move towards getting licensed. He is also known as a leading expert on blockchain law and regulations. Zhou’s work with Huobi allowed the company to apply for a BitLicense.
Impact of the Report?
So what is the impact of the report? Could it affect the exchanges as some of them are moving towards federal approval? By gaining federal approval, it will become easier for a lot of crypto exchanges to operate and not deal with the different regulatory approaches that each state chose to go for.
Virtual Markets Integrity Initiative Report
The Virtual Markets Integrity Initiative report that was released on September 19 threatened exchanges that didn’t want to participate. Barbara Underwood who is New York’s attorney general called out those exchanges that didn’t want to participate including Kraken. However, Kraken isn’t exactly having its operations in the state of New York.
For Zhou, he believes that it is a strange move. However, he believes that “other state banking regulators will look at this report closely”.
He also added that: “Those with the idealistic belief that one of the most noble ideals about Bitcoin is that it was created as an “unregulated” currency are fools to believe that it actually survive, much less thrive in that environment. The truth is that Bitcoin and the companies behind it are regulated by the banks in which they depend upon in which to grow their business”.
Clark thinks that without regulations, it becomes harder for businesses to grow. It costs higher overhead costs and higher fees for consumers.
Should There Be a Concern Regarding Price Manipulation?
Should there really be a concern of price manipulation in cryptocurrencies? It is true that there is a possibility of price manipulation. In fact, one of the reasons why the US Securities and Exchange Commission decided to reject Bitcoin ETF applications is due to the possibility of price manipulation.
Considering the data collected by the New York State Attorney General’s office, there is a chance that investors are up against crypto exchanges. It is a possibility that exchanges are really hiring professional traders.
For Zhou, he believes that this report could be used how other states are going to treat other crypto exchanges. Though there are no signs yet whether or not the report is going to be used, there are large entities that could easily use this report to dictate state bank charters. And if this becomes a reality, it will become harder for crypto exchanges to operate per state.
The solution that Zhou is proposing is a federal banking license. This could potentially solve dealing with different attorney generals turning sour on the crypto industry. And also, this could mean that a crypto exchange could operate on a national level. Though it is a stringent process, you already have the likes of Circle that is considering to file for this type of application.