The head of Switzerland's Financial Market Supervisory Authority (Finma), Urban Angehrn, issued a stark warning during a conference in Zurich, comparing the state of cryptocurrency trading to the U.S. stock market in 1928. He called on global financial watchdogs to step up investor protection efforts and leverage technology to detect and prevent market abuse.
Crypto Market's '1928 Moment'
“It would seem to me that a lot of trading in digital assets looks like the U.S. stock market in 1928, where all kinds of abuse, pump and dump, are now in fact frequently common,” Angehrn stated. The year 1928 is infamous as the peak of the speculative bubble that preceded the Great Crash of 1929, which triggered the Great Depression. Angehrn's analogy suggests that the crypto market's current lack of oversight and rampant speculation could lead to a similar catastrophic outcome.
Angehrn emphasized that regulators must “think about the potential of technology to make it easy to deal with the large amounts of data and to protect consumers from trading on abusive markets.” He argued that technology is not only the source of new risks but also a key tool for supervision. Finma itself has been exploring automated surveillance systems to flag suspicious transactions in real time.
Market Turmoil and Regulatory Momentum
The call for stricter oversight comes amid severe turmoil in the crypto market. The total market capitalization has plummeted from nearly $3 trillion in November 2021 to around $900 billion, a decline of over 70%. Bitcoin (BTC), the largest cryptocurrency, fell below $20,000 for the first time since December 2020, with year-to-date losses of approximately 60%. High inflation and rising interest rates have triggered a flight from risk assets, accelerating the sell-off.
Several high-profile crypto firms have faced crises. Celsius Network, a major crypto lending platform, suspended withdrawals in June 2022, citing extreme market conditions. The collapse of the Terra ecosystem in May 2022 erased billions of dollars in value. These events have prompted regulators worldwide to intensify scrutiny. Angehrn's remarks signal that Switzerland, often seen as a crypto-friendly jurisdiction, is now leaning toward a more proactive enforcement stance.
Global Regulatory Outlook
Regulatory approaches to cryptocurrencies remain fragmented. The U.S. Securities and Exchange Commission (SEC) has ramped up enforcement against exchanges and stablecoin issuers. The European Union adopted the Markets in Crypto-Assets (MiCA) regulation, setting harmonized rules for the bloc. Switzerland, under Finma's existing framework, already requires token issuers and trading platforms to comply with anti-money laundering (AML) and investor protection rules. However, Angehrn believes that international coordination is essential to address cross-border transactions and the decentralized nature of many crypto projects.
“Investor protection should not be just a slogan,” Angehrn said. “It must be reflected in concrete rules and enforcement.” He advocated for the use of big data and artificial intelligence to monitor trading patterns and mandated transparent pricing and risk disclosures from platforms. Finma has previously taken actions against Swiss-based crypto companies, including warning against unapproved token sales and forcing non-compliant platforms to shut down.
Whether Angehrn's warning will lead to immediate regulatory tightening remains uncertain. But history suggests that when market euphoria reaches its peak, regulatory alarms often sound the loudest. Investors in cryptocurrencies may be wise to heed the lessons of 1929—before the next crash writes its own chapter.