Does Crypto Need an EDGAR
In just a decade crypto went from a whitepaper into an innovative mass-adopted technology. But have you ever wondered what would happen if there is a corporate global registry for crypto assets? Would the whole industry change for the best and offer us even more benefits?
Today the crypto ecosystem composes of around 2,000 different assets, including cryptocurrencies, stablecoins, utility, and security tokens. Only a few years ago Bitcoin was considered a bubble, now it is implemented globally, with more than 150 countries that have adopted blockchain and cryptocurrency utilization.
During the ICO boom in 2017 investors put up $5.6 billion into start-ups offering tokens buying out for future rights in the company, giving the funding alternative to a traditional IPO.
Unluckily, around 80% of all startups appeared to be fraudsters, some projects died or failed to launch because they didn’t get their minimum. And only a few hundred of all ICOs have managed to get successful. But due to the fact that ICOs are unregulated, funds that were lost in scamming schemes are not recoverable, meaning investors have lost millions of dollars.
Why did it happen? Surely ICO startups did not provide investors with the needed transparency, and there was no clarity on how they were going to follow up their offering. Investors could not track the funds they put into companies.
Why crypto needs a registry similar to SEC's EDGAR database
EDGAR, the Electronic Data Gathering, Analysis, and Retrieval system runs disclosures on millions of companies. The system allows anyone who wants to get more information about a company to check its history, management, leadership, and even revenues through annual, quarterly, or current reports.
Today the Crypto space is outside of regulatory institutions, there’s no one in charge. A registry would operate as a global standard that the whole industry can rely on.
An EDGAR for crypto companies would mean transparency around company activities, leading investors to better decide on which company to put their funds in. It also would change the whole crypto industry for the good, spreading information about new projects and making the public aware of upcoming programs.
Why it may not work out
The crypto community always consisted of developers who are keen to know how far technology can push the community, but things are changing in a different direction now. Now that finance people are in, global enterprises started to accept Bitcoin as a means of payment, and more and more companies issue utility and security tokens, meaning there should be a step into the investors' protection.
But the problem is even if investors want to know information, could they get it right? And would they invest time in searching for this information?
Still, what would change if the corporate global registry for crypto assets exists?
First and most important, the crypto community will notice red flags as soon as possible, because full disclosures or denial to disclose can warn investors, as well as regulators, about scammers or new projects that do not worth funding.
Besides, the transparency of the project will increase investor trust, and allow building better relationships, attracting more clients.