Regulating cryptocurrencies is a good thing and it might even help advance the digital currency market, crypto trader Ran Neu-Ner told CNBC on Thursday.
While Neu-Ner said there will be crackdowns during this process, he encourages it.
“I hope that they can catch the people [conducting fraudulent activities], because we have to weed out the bad actors,” said Neu-Ner, who is the founder of OnChain Capital and an early investor in bitcoin.
“If we have bad actors, it’s going to create a lack of trust in this asset class,” he said. “If we want to make this a real asset class, with real people, then let’s weed out the bad actors. But the first step is, let’s legislate first; let’s regulate first. So we know what the playing field looks like.”
This week, the U.S. Department of Justice (DOJ) launched an investigation into whether traders have been manipulating the prices of bitcoin and other cryptocurrencies — part of increased regulatory scrutiny in the sector.
Earlier this month, the U.S. Securities and Exchange Commission launched HoweyCoins.com, a phony website designed to teach investors what fraudulent ICOs, or initial coin offerings, might look like. The North American Securities Administrators Association’s “Operation Crypto-Sweep,” a look into 70 possible crypto schemes, also began in May.
“They’ll be able to clean [cryptocurrency exchanges] up a little bit,” said Kelly, whose firm focuses on digital currencies.
Neu-Ner said that with a smaller market size and fewer people in an unregulated and often misunderstood industry, it was easier to take advantage of what was unknown.
Now though, he said, regulations are a good thing, as manipulation would be harder with “eyes everywhere.”
“Everyone is worried about who’s watching,” he said.
Kelly agreed, pointing out that clear regulatory guidelines and a manipulation-free market was just one of the SEC’s guidelines for a physically backed exchange-traded fund (ETF).
“This is one more step toward the maturation of this process,” Kelly said.
Neu-Ner has previously warned investors and regulators alike for the need to establish regulations on initial coin offerings, or ICOs, at the U.S. Securities and Exchange Commission. Or else, he said, the U.S. could be at risk of “falling behind” other countries in terms of innovation and hosting companies that use blockchain technology.
Bitcoin, which was priced around $7,500 Thursday evening 5:30 p.m. ET, reached highs of approximately $19,500 last December.