After bad news in 2022, looking ahead to the future of the crypto asset management industry

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2022 has many big events happening in the cryptocurrency industry.

In May, Luna, which was the world's top algorithmic stablecoin at the time, and its related cryptocurrency (UST) evaporated tens of billions of dollars in market value. It only took a very short time to go from the perfect mechanism of Defi to the death spiral that maintained the failure of the price mechanism. It has affected many users who use Defi for arbitrage, investment and speculation. It also caused panic in the entire cryptocurrency market, and the market value dropped sharply.

In November, the well-known cryptocurrency exchange FTX, which originally occupied the leading position in the industry, instantly evaporated billions of dollars in digital assets from rumors, rumors, runs, suspension of services, and finally declared bankruptcy in just a few days. The incident also caught users of the exchange by surprise. What followed was great turmoil across the cryptocurrency industry.

Compared with the previous year, which was very good. The application and popularity of various encrypted assets including NFT, Metaverse, Gamefi, etc. have increased significantly. The market value of the entire encrypted currency has reached an unprecedented height. The historical price of more than 60,000 US dollars is a new high. The impact on the cryptocurrency industry in 2022 is very negative. After FTX, it was reported that large and small crypto companies around the world were directly affected, and users of these crypto companies were also indirectly hurt by their assets, and then quit market. Negative events in the general environment, coupled with the loss of investor confidence, the entire cryptocurrency market value once fell below $1 trillion, deepening many people's concerns that the boom in this market in recent years is heading for a bubble burst.

Because the rights and interests of many investors were damaged, they turned to the governments of various countries for assistance, and the governments of various countries have also paid more attention to the cryptocurrency market environment after the occurrence of these negative events. And study to take regulatory measures to avoid recurrence of regret. For the cryptocurrency market, is the impact of government regulation positive to improve stability and security? Or is it a negative that suppresses the possibility of innovation? It is unknown at this time, however, it is foreseeable that government regulation will change many behaviors in the industry.

For the government, the cryptocurrency market has proved that this is not a very niche market. On the contrary, the rising market capitalization and new players are proving the attractiveness of the cryptocurrency market. Prior to this, ordinary investors who entered the cryptocurrency market from an investment perspective were like gamblers entering a Las Vegas casino: first, they exchanged cash for chips; Earn more chips, or lose and then exchange chips, with a little luck, maybe switching to 777 will get more than 100 times the income. Of course, every game has some small loopholes, so some experts have begun to teach how to exploit these loopholes to obtain greater benefits. In order for more people to participate, the casino provides free drinks, finds handsome and beautiful dealers, finds well-known spokespersons, spends money to organize more grand events, introduces more interesting games, etc., in order to collect fee income. All these seem to be balanced between casinos and gamblers, but everyone forgets that such normal casinos are regulated by the government. If you play in an unregulated casino, you will still have drinks, handsome and beautiful croupiers, fun games to play (even more fun), and grand events to participate in. The only difference is that it is almost impossible for you Win big, and even if you win, you will get it back in various ways.

For the cryptocurrency market, places that provide trading, investment, speculation, and arbitrage (OTC, cryptocurrency exchanges, or Defi-related services) have indeed developed rapidly because there is no strong government supervision, but the same, when there are If the provider makes a mistake (intentionally or unintentionally), it will cause great losses to the user, and there is no way to claim it. On an individual basis, these users whose main purpose is to increase profits are the most involved in the cryptocurrency market environment. And that's why it needs to be regulated.

Compared with the previous financial market, in the United States, the rise of hedge funds has created many myths about fund managers. However, these funds are also subject to government supervision. In addition to raising the industry threshold for applying as hedge funds, there are also investments similar to professional investors. Threshold, although there will still be trading mistakes, or other forms of mistakes that lead to loss of asset size, but such a threshold system also enables participating investors to have basic protection and avoid fraud by unscrupulous operators in the name of hedge funds . Of course, if these mistakes are considered to be intentional mistakes, then indeed any kind of failure can be included as intentional fraud, but it is undeniable that regulated trading venues will reduce the number of individuals who are directly harmed.

From the rise of new markets, the participation of early users, the expansion of the market to more participants, and the provision of asset management services by professionals can also be applied to the cryptocurrency market. After the regulations are clarified, more professionals will be able to assist general investors. In addition to gaining profits in the cryptocurrency market through professionalism, providing basic protection for customers in accordance with regulations is also a necessary survival condition.

In addition, in a market that tends to be stable and gradually grows (accommodating more people to participate), asset management units will gradually pay attention to market risk management and replace speculative management methods. For example, after considering the safety of assets, whether to conduct relevant transactions on unregulated trading venues will be more important than the preferential rates offered by exchanges. In terms of arbitrage trading, more trading venues can usually bring arbitrage opportunities, but in view of the FTX and Luna incidents, investment positions built on trading venues will have more reference to transaction security and so on.

The improvement of risk management technology will be the next milestone in the cryptocurrency asset management market. It is expected that the cryptocurrency industry based on blockchain technology will show how to integrate risk management technology elements into Defi, and once again show its magic to the world Performance.