Plenty has called for stronger regulations to be put on the business after several prominent figures got themselves into trouble for participating in a presumably deceptive crypto-based scheme through the practice of ‘pump and dump.’
Viktar Prakapenia, the creator of Capital.com and Currency.com, is among those who is spearheading the demands for stricter regulations. Prokopenia explains how the cryptocurrency sector came to be in the Wild Frontier of financial technology in this article as well as how the adoption of tighter regulations can aid in its return to a more secure field, to the advantage of the customer.
Pump-and-dump celebrity scams make headlines frequently. Some celebrities allegedly served as renowned brand ambassadors for EthereumMax, or EMAX, that were promoted to individual investors as innovative and groundbreaking crypto-assets. However, it is claimed and suspected that all those sponsorship deals were a hoax used by EthereumMax's developers to raise the token's worth.
Countless celebrity endorsements appear frequently online. Think of Gametech as an example. According to its webpage, Gametech engages in continuing advertising and tie-ins, featuring ambassadorships and endorsements from celebrities, social media influencers, and athletes.
Or, to put it more bluntly, ‘We invest in success at Gametech.’ In this sense, celebrity endorsements are acceptable.
With the breakthrough of her laser eye meme all around different social media platforms, the iconic influencer, Paris Hilton, supported cryptocurrency. You have to promote your goods in a marketplace.
Notwithstanding all the criticism, there is a straightforward economic aspect to this: Famous people ‘generate additional value.’ This is significant in the domain of cryptocurrencies, where perceived value can vary much more than the underpinning blockchain technology.
Celebrity endorsements increase credibility, add glitz, and in the perspective of most, it provides things with ‘genuine’ status.
Therefore, due to these extra considerations, assets supported by celebrities are inherently greater valued. The degree of added value is determined by the personality involved.
Everything seems simple thus far.
However, there are situations when this toes the border towards a more harmful deception, as could be the situation with EthereumMax. There are claims that certain cryptocurrency ‘pump and dump’ operations are sophisticated Ponzi schemes created expressly to defraud unsuspecting investors of their investment.
Here's where regulations enter into the picture. I've been an advocate for regulation in the fintech industry for a very long time. Cryptocurrency regulation, in my opinion, can benefit the market and point the way toward a more promising future.
Moreover, I believe the sector should proactively set an example and concentrate on the benefits that regulation may provide.
What for? Since the cryptocurrency industry has so far been treated like the Wild West, regulation is a vital component of developing if we really intend to alter that and join the reputed and reliable financial system.
Viktar Prakapenia suggests that the crypto industry and consumers can be shielded from unethical behavior with the correct regulations. It prevents fraudsters or anyone looking to take advantage of consumer ignorance from defaming the entire industry.
Consider Binance as a reference. It disregarded rules for too long, and when accusations of tax fraud and fund embezzlement are looked into, it is currently prohibited in numerous areas.
Regulation will inevitably arise as our industry develops, so let's embrace it. If we do differently, we aid those who want to outlaw all cryptocurrency trading by banking institutions.
This lesson was painfully learned by the tech industry. Due to their indiscriminate data collection, legislation like GDPR and others were created. They are now bound by a structure that has been enforced on them, and breaking the rules can result in severe penalties. Tech companies could have produced more of a balance if they would have handled regulatory agencies' and customers' data with much more prudence.
The best course of action is to cooperate with regulators. This is so that regulators don't accidentally restrict liberty. To maintain freedom, one must cooperate with regulators.
It would be foolish and imprudent to try to hide this reality from consumers, collaborators, and staff equally. The problem with burying your head in the sand would be that someday you'll realize that nothing has shifted while you were asleep. It is much preferable to mold this transformation than to have to reconfigure.
As forerunners of the business, we ought to guard the system from abuse and safeguard customers. On the other hand, regulation lacking the input of practitioners can result in blunders and miscalculations, unforeseen effects, and potential financial dangers.
We are by no means the first sector of business to begin without regulations. Only a few nations have laws that used the term ‘internet’ two decades ago. The majority of legislative frameworks in use today have changed to reflect the globalized world. Cryptocurrency will experience the same, regardless of whether we like it or not. The goal is to steer this movement in the right direction, thus discourse, argument, and debate fueled by a knowledgeable perspective is the only approach to advance.
The EMAX case demonstrates how celebrity endorsements can go wrong. EMAX is currently beset by unfavorable press coverage, a decline in credibility, and presumably significant legal losses, as Viktar Prakapenya says.
The solution is for a celebrity endorsement to be placed under a defined regulatory structure, just like it is with conventional investment instruments. Promotion is necessary, but it must be done honestly and within defined parameters to uphold customer confidence and moral success.
This strategy will boost consumption and investment optimism and create a vision we could all be pleased with, so the economy can only gain from it.
About Viktar Prakapenia
Viktar Prakapenia is a seasoned investor and skilled entrepreneur in the IT industry. He founded the investment company VP Capital, which specializes in blockchain and fintech startups, as well as computer vision and artificial intelligence companies like Facemetrics and Banuba. Viktar is proficient in cutting-edge and highly inventive technologies. He has degrees in law, and computer science, and a doctorate in Business Administration. He has established several successful technology companies that he has since sold.