Bitcoin warning as Musk sends 'Wild West' crypto surging – call for new US regulator

Bitcoin's price has risen nine percent in the last 24 hours, after the Tesla chief announced the company would resume accepting it as a mode of payment when there is a trend of “reasonable” clean energy use by miners. He added that the company only sold about 10 percent of holdings to confirm that Bitcoin could be “liquidated easily without moving the market". But it came after the token experienced a turbulent couple of months in the face of regulation threats.

These concerns were renewed on Friday after top banking watchdog, The Basel Committee on Banking Supervision, proposed to classify the flagship crypto as the riskiest of assets.

Professor Alexander, from the University of Sussex, said: “If the US is serious about regulating Bitcoin and other crypto assets, then they need to form a new crypto regulation commission to encompass both markets and institutions.  

“A well-resourced commission that incorporated experts who really understand what is driving these markets is essential. 

"Regulators are often one step behind innovation, which is certainly the case with crypto. But with a specialist commission, there’s potential for regulators to keep up or even be a step ahead of those engaging in fraud or seeking to manipulate or abuse the crypto markets.

“It would help establish market discipline which is absolutely critical to allow the crypto sector to mature and to show its long-term potential.

“We need sector-specific regulators to eradicate the malpractice that is happening in plain sight."

Prof Alexander said that the unregulated market has made cryptocurrency "the Wild West of financial markets" and only regulation can help it to be "truly effective".

She then sent a warning, adding: “If US regulators don’t take this step to show that they are serious about specific oversight of the sector then they may open themselves to the risk of class actions from investors arguing that they have taken insufficient steps to limit the risk of loss from malpractice. 

"Only through proper research and development with sector-specific knowledge can regulators show they are really serious about protecting investors and shutting down the most blatant examples of market abuse and manipulation.

READ MORE: Bitcoin tipped to be 'universal currency' despite Donald Trump's 'scam' claim

“I think the US needs to take the global lead on this issue, they’re the only regulators who have shown any stomach for the fight.  

“Neither the UK nor European regulators have really started to get to grips with crypto regulation. 

"The Chinese approach is very ad hoc – only seeming to intervene with threats of bans whenever a bull market looks to be getting out of control."

On May 21, China also announced it would start a “crackdown on Bitcoin mining and trading behaviour”. 

According to the University of Cambridge's Centre for Alternative Finance, over 65 percent of miners working on the Bitcoin blockchain were based in China as of April 2021.

Robert Van Kirk, managing director of US-based tech company KaboomRacks, said miners were frantically “fire selling” their equipment after the news.

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Britain’s Financial Conduct Authority (FCA) has previously warned investors of the risks that come with investing in cryptocurrency.

They said: “If consumers invest, they should be prepared to lose all their money.

"Some investments advertising high returns from crypto assets may not be subject to regulation beyond anti-money laundering.

“Significant price volatility, combined with the difficulties valuing [Bitcoin] reliably, place consumers at a high risk of losses.” does not give financial advice. The journalists who worked on this article do not own cryptocurrency.

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