During a panel discussion at Consensus 2023, legal professionals emphasized the value of coordinating global regulatory frameworks for cryptocurrencies while also taking regional variations into account.
Marianne Bechara, a senior counsel at the IMF, pointed out that it would be unwise to treat all cryptocurrencies the same without considering the context. Brian Yeoh, director of fintech at Abu Dhabi Global Markets, noted there is some coordination, but he said there is room for local jurisdictions to address their specific circumstances.
For several years, regulators have been trying to figure out how to best coordinate global crypto regulations. As a result, the European Union parliament passed the MiCA legislation last month, which some analysts have said might serve as a model for other nations. The MiCA regulations, which apply to service providers and trade brokers, are designed to safeguard investors and consumers while promoting financial stability and innovation in the crypto sector. The rules will go into effect between the middle of 2024 and the beginning of 2025.
Nonetheless, the panelists noted that every nation or region has problems that are unique to that place and thus should develop crypto regulations that best suit its people. The IMF and FSB are expected to propose worldwide guidelines for cryptocurrency in September 2023. In the meantime, individual countries are moving ahead with crypto regulations.
The United States has so far taken a split stance on crypto regulation. While some legislators are pushing for a thorough new regulatory framework to be developed to allow the sector to flourish, financial market regulators are tightening up on worries over scams, money laundering and cybercrime.
In March 2022, the Biden administration issued an executive order requesting that federal officials evaluate the broad hazards and opportunities presented by cryptocurrency. Recently, SEC Chair Gary Gensler noted that investment advisors cannot use cryptocurrency platforms and lenders as qualified custodians if they are not subject to the same regulations as stock exchanges.
In the United Kingdom, the situation is the same. Rules have generally encouraged the development of the crypto industry, but authorities are starting to crack down due to worries about fraud and money laundering. The country’s main financial regulator, the FCA, even banned all activities by Binance, the largest cryptocurrency exchange in the world, in 2021.
The recent failures in the industry, such as the demise of FTX, the third-largest crypto exchange in the world, and the subsequent arrest of its CEO, Sam Bankman-Fried, have highlighted the need for regulation of the crypto industry.
The suggestion that the different authorities across the globe need to work together to develop regulations for the cryptocurrency space is one that could have the support of industry actors such as HIVE Blockchain Technologies Ltd. (NASDAQ: HIVE) (TSX.V: HIVE) since it would provide clarity regarding the rules that these companies must adhere to in the different markets in which they have an interest.
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