How Does the Lack of Regulation in the Cryptocurrency Market Impact Investor Protection?

The lack of comprehensive regulation means investors have minimal protection against fraud, market manipulation, and platform failures. Unlike traditional banks, crypto holdings are not covered by government insurance like FDIC or SIPC, so if an exchange goes bankrupt, investors can lose everything.

There is often no legal recourse to recover funds lost to scams or hacks. This unregulated environment also makes it easier for bad actors to operate with impunity through schemes like "pump and dump".