alot of people here cannot even get the buzzwords right let alone associate the correct businesses to the correct buzzword
an investment company use terms like portfolio management not "exchange"
they use brokerage not "exchange" they use investment firm not "exchange"
so lets define 2 terms
portfolio managers (custodians of investment)
and exchanges(swap shops)
the latter would be a service of one currency in.. another currency out.. same day. no custodial service
the former would be a custodian. that allows buys and sells of multiple assets in and out interchangeably while still holding onto and being responsible of their customers value/security
there are not that many actual "swap shop" exchanges that are decentralised. but there can become some that offer instant swaps without long term custody services needed. and it can become its own industry.
however these swap shops would still need regulation because they are still a facilitator of finance(a money/currency business) thus still end up needing to KYC customers
however due to lack of custody service they wont need extra requirements like auditing customers holdings or insuring customer holding becasue its a straight trade in and out
where as portfolio managers would need extreme regulation to support their competence to manage and hoard customers value as well as needing regular audits and pay for insurances and security and other safe guards like having a customer service team for customers to actually contact
...
i know people will say "its bitcoin there should be no regulations" well that was true in 2009-2013 when bitcoin was not seen as a currency but as private property(asset) but now that its defined as a currency asset. currency laws started to apply.. and the only way to avoid it now is if it was challenged in court to redefine bitcoin as no longer a currency but again as a swappable/tradable private property. then without the currency jurisdiction currency laws wont apply. thus no regulations again
Thanks a lot franky1, at least someone who fully understands me.
Regulation is not really my subject, but there's no doubt it's needed. We don't want the FTX debacle to happen again. It would not have been possible if FTX had been a basic commercial exchange. Swap shop as you say. I used the terms commercial exchanges and investment exchanges thinking about the banking sector.
May you share more information about the Kraken changes from a commercial exchange to an investment exchange, please.
I just can't. I've used Kraken when it was a simple exchange, and someday I discovered they had turned into a cryptocurrency portfolio manager. Without any warning... That happened quite a while ago, though.