Why Global Digital Finance could be pivotal for cryptocurrency best practices

Global Digital Finance is an industry membership body seeking to establish a global Code of Conduct for cryptocurrency market participants. Will it work?

Global Digital Finance (GDF) is a non-profit initiative launched at the beginning of 2018. Formed to promote the global adoption of best practices for crypto-assets and digital finance technologies, GDF could be pivotal for solving many of the industry’s problems.

According to the organisation, the cryptocurrency ecosystem lacks the regulation and codes of conduct necessary to protect investors and their money. Could Global Digital Finance fill this gap and increase the credibility of digital assets across all markets? Let’s take a closer look.

A global code of conduct by Global Digital Finance

We know by now that blockchain and cryptocurrencies will change the way we use the internet for conducting business and personal transactions. These technologies even have the ability to change the world.

The business opportunities and possibilities opened by blockchain adoption across industries are huge. And for many, this is a sign that cryptocurrencies need to reach a more mature level to enable sustainable growth.

Global Digital Finance promotes the adoption of cryptocurrency best practices to allow crypto markets to become more transparent and efficient. This, they claim, will benefit all market participants from investors to blockchain businesses.

The industry body is comprised of policymakers, bankers, financial regulators, academics, and industry giants. Their goal is to create a global standard for all cryptocurrency market participants to follow.

Last year, GDF released its first industry Code of Conduct as the first step toward establishing global industry standards in the crypto-asset market. Since then, members have put together five parts of the code that discuss overarching principles, token sales, token platforms, funds and fund managers, and rating websites.

Something as serious as cryptocurrency governance policies could create a revolution within the revolution. If this set of codes of conduct was universally accepted in all crypto markets, there would be unified standards.

This would help policymakers, market participants, and regulators alike – as well as increase confidence in cryptocurrency.

Cryptocurrency best practices and regulations could generate growth

The need for an authority to regulate the market is growing as more people get involved in cryptocurrencies and blockchain technology.

No matter how appealing the benefits of investing in digital assets may be, the ugly truth is that nothing is secure in the crypto world. The volatility of digital coins, together with more than $1 billion worth of cryptocurrency hacks in 2018 alone, can’t be ignored by cryptocurrency owners and investors.

There’s also the debate over whether cryptocurrencies are utilities or securities. This means that each country regulates them differently, depending on their local laws. There’s no global unity in digital asset markets, which leaves room for money laundering, illicit activities, scams, and other risks that come with investing.

Regulations under a unified code of conduct could reduce volatility and provide a more stable environment for investors. More rigid regulation would also reduce the ability of market manipulators to generate price fluctuations for personal interests.

Moreover, cryptocurrency best practices like those proposed by Global Digital Finance could create a more secure cryptocurrency ecosystem.

Of course, merely writing a Code of Conduct can’t eliminate hacking or expel bad actors. But it can increase communication efficiency between users and exchanges. It could also encourage networks to adhere to the same security practices for improved safety when using blockchains.

A central authority could also focus on educating people about cryptocurrencies and how they work. Most people outside the crypto world still struggle to understand what Bitcoin is. At the same time, many cryptocurrency owners don’t even know how to store their private keys wisely.

An authority that regulates blockchain and cryptocurrencies could generate greater awareness of how digital assets work and what the real risks are when investing.

Regulation could change the cryptocurrency industry

GDF released its Code of Conduct in an attempt to find viable solutions for market players of all sizes. It has the potential to come up with a valid model of cryptocurrency best practices for a fair and more transparent market.

However, this also adds a level of centralisation to the blockchain industry, which is not welcomed by all participants. Decentralisation is at the very core of blockchain technology after all.

Regulation could have positive or negative effects on the crypto market. The current decentralised system has seen little rules until now, so no one knows what could happen if something like GDF’s Code of Conduct was adopted on a global scale. Only time will tell.

Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.

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