Global call on crypto regulation from the World Economic Forum
The World Economic Forum (WEF) has recently published a bulletin titled “Paths to Regulating Crypto Assets” in which it provides advice on the regulation of crypto. The WEF is the latest international organization to make recommendations on the regulation of cryptocurrencies by publishing this bulletin.
“Crypto-assets, at their current level, represent a small fraction of the overall global financial system. However, the lack of regulation in some jurisdictions and the absence of a harmonized regulatory framework raise concerns about whether this market poses a threat to global financial stability.” expressions were used.
The statement argued that global coordination in cryptocurrencies is necessary to eliminate uncertainty, regulatory arbitration and inconsistent enforcement.
“Blockchain technology brings challenges”
The authors noted that blockchain technology presents “unique technical and structural challenges for regulation due to the decentralized, transparent and open-source nature of the ecosystem.”
Without a common minimum understanding, the group said that it is difficult to regulate the ecosystem from a global perspective, given the cross-border nature of crypto activities.
“Crypto-assets and their ecosystem do not always fit well with the current activity-based, broker-driven regulation approach, even where crypto-asset activities mirror those in the traditional financial sector.”
The WEF said these complexities lead to a failure to develop consensus in the ecosystem, compliance, increased costs of establishing legitimate global businesses, and a lack of consumer protection and empowerment.
WEF has a lot of suggestions in its bag
John Ho, Head of Legal and Financial Markets, Standard Chartered Singapore, said: “As the G7 leaders acknowledged at the May 2023 summit, effective monitoring, regulation and oversight is critical to addressing the financial stability, integrity risks posed by crypto-asset activities and markets, fostering responsible innovation and preventing regulatory arbitrage. is of importance.” said.
They also said that the secrecy of services such as crypto mixers, self-custody wallets, decentralized exchanges makes regulation difficult, and that the crypto industry’s growing ties to traditional finance increase the risk of it spreading to other industries.
There are many items among the recommendations. These; Establish best practices for crypto, harmonize terminology and definitions, promote cross-industry coordination among regulators, coordinate efforts to establish interoperable technical standards, share best practices to address operational and cybersecurity risks, innovate “responsibly” and interacting with policymakers and regulators.