The rise of market manipulation has reached an alarming proportion, prompting governments and regulatory bodies to establish guidelines to address the situation and make the transaction processes more open.
The island nation of Gibraltar has recently unveiled new regulations to curtail market manipulation and insider trading that have found their way into the crypto industry.
The new regulation will require crypto firms based in the British Overseas Territory to work with the authorities to combat the rising spate of price manipulation, liquidity, and other illegal vices.
The country published a new amendment to the existing laws and released guidelines for crypto service providers operating within its jurisdiction. A leaked portion of the policy revealed that the authorities cautioned crypto companies about the need to respect the markets they are working in.
Additionally, as a matter of urgency, crypto firms are mandated by the Gibraltar Financial Services Commission (GFSC) to fight against the improper influence of the price and values of products, market information, liquidity, and other harmful practices likely to affect market integrity.
The island nation is known to have investor-friendly laws that would attract responsible, established crypto firms to the country. The rules are not a marketing scheme for irregularities.
Market Manipulation and the Crypto Industry
There have been reports of market manipulations worldwide, which have proven to be a hard nut to crack for governments’ regulatory agencies and the crypto market. Experts believe that whales also play a significant role in price determination in the industry, aside from crypto exchange platforms.
According to Ryan Giannotto of GraniteShares, Bitcoin is the closest example of a digital token prone to market manipulation. He added that only a little above 0.02% of BTC wallet holders exert control over 40% of the BTC in circulation. As Ryan posited, the industry is widely unbalanced, and this gives an edge to those calling the shots in terms of swaying the market to their benefit.
Further data from Bitinforcharts.com lends credence to Ryan’s claims. Admittedly, the current wealthiest BTC addresses in the top-10,000 control 59.16% of the Bitcoin supply worldwide.
Moreover, crypto price manipulations exist in the non-fungible token (NFT) ecosystem. LooksRare’sLooksRare’s wash trading, as previously reported by CryptoSlate, has accounted for 95% of the trading volume. This is a damning report considering how the market has been inundated with laws designed to fight such cases.
Crypto Industry Regulations are a Tough Job to Handle
Most jurisdictions that have officially approved the use of and transactions in cryptocurrency struggle to regulate the crypto space within their territory. Unlike Gibraltar, most countries, like the United States, have no specially designated agency to oversee and regulate the activities of the crypto industry, let alone have a framework in place for effective regulation.
There has been some remarkable progress concerning laws regulating the crypto market in some jurisdictions. Still, additional effort is needed to arrest the ugly development. The struggle to achieve the desired code of operation is still on.