Why Do Crypto Platforms Need Regulation For Safety?

December 14, 2023
October 27, 2023
< 3 min read

Security is one of the most repeatedly audited aspects of every crypto ecosystem, and with good reason. Proper regulation not only influences everything platforms offer but also attempts to guarantee that funds are safe and that users are protected.

In this article, we’ll explain everything you need to know about crypto platform regulation’s importance and why you should avoid non-compliant systems.

Crypto and safety: a symbiotic relationship

Crypto and safety became almost synonymous, so without crypto security, most such systems miss one of their essential points. Mistake not; it’s not the blockchains’ safety we’re talking about in this case, but rather that of the platforms that offer these novel assets for the masses. The process loses its purpose if purchasing otherwise secure crypto assets is not appropriately safeguarded.

What does crypto platform regulation mean?

With that said, let’s take a brief look at what crypto platform regulation means. In short, such regulation means the official supervision and regular check of national authorities in any country or legislation. Having a financial service provider license issued by a member country of the European Union like Swaps has is the perfect example of proper crypto platform regulation.

The regulation does not mean limitation but, in fact, the opposite: transparency and verified security. But, if a crypto platform is regulated, it mainly implies trustworthiness.

Why do crypto platforms need regulation?

Crypto platform regulation is relatively straightforward: to protect the users and their funds at all costs. This doesn’t mean protection against market movements but rather malicious intent from the side of the platforms or hackers. The regulation checks whether platforms are ready to handle transactions and funds safely and adequately safeguard them from all dangers.

Without regulation, platforms and users alike would lack a proper benchmark and framework to audit systems and determine potential shortcomings. To help with that, a regulatory framework is usually assembled by experts in the industry who know exactly what to look for when checking crypto platforms.

Crypto platform regulation is relatively straightforward: to protect the users and their funds at all costs.

What are the risks of engaging with non-regulated platforms?

There are certain risks involved from a user’s perspective when engaging with non-regulated crypto platforms. The most significant risk is the worst nightmare of most investors, that is, unrecoverable loss of funds through cyberattacks or other hacks. Most regulated platforms have audited protection mechanisms against such threats, which their non-regulated counterparts can’t claim.

Another reason why everyone should avoid non-regulated platforms is the lack of trustworthiness. If a platform is regulated, it must have passed a series of severe examinations by official authorities, which would have identified if the ecosystem is a scam or is unable to deliver on its promises.

Final thoughts

Overall, the proper regulation of crypto platforms is exceptionally vital yet often overlooked by investors and traders. If you’d like to see your funds in the safest places, avoid non-regulated platforms and conduct your crypto business through fully regulated and compliant providers like Swaps.

Buy Crypto Securely

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