What the regulator offers:
1. Licensed exchanges and wallets
The state says: "Store your assets only on licensed platforms." The idea is that these exchanges will be audited and held accountable for losses. But you remember what happened to the licensed banks when they went bankrupt, right?
2. Obligation of exchanges to keep reserves
Governments impose a rule that exchanges hold reserves equivalent to customer assets. This should prevent further FTX scandals. But will anyone check these reserves? And won't it turn out that the "reserves" are paper IOUs?
3. Protection against burglaries
Regulation can force exchanges to invest in cyber security so that your coins don't disappear in the event of a hacker attack. That sounds good, but when was the last time a state led the way in cyber security? (Let's remember at least the data showers).
4. Insurance of assets
Some countries talk about insuring cryptocurrency assets like bank deposits. But let's be honest: who will cover the losses if Bitcoin drops 40% in a day? State or insurance company? (Spoiler: no one).
5. Blockchain transparency
The obligation to publish information about transactions and reserves is supposed to reduce the risks of fraud. But this is also the risk of losing privacy: who wants your assets to be known by the tax office and, perhaps, by a jealous neighbor?
6. Legal protection
The regulation promises you legal protection in case of fraud. But what will it look like in reality? Proving that your token disappeared due to fraudsters can cost more than the token itself.
Reality:
The government is more concerned with knowing where your assets lie and collecting their "fair tax". Regulation will not be able to protect you from hacks, market falls or your own risky decisions. Therefore, the real protection is a cold wallet, strong passwords and your own common sense. Well, what about the state? She is here more for "control" than for protection.
