In other words, Crypto is a huge experiment that has no geographical boundaries. Bitcoin is the United States; China Russia or Company; It has nothing to do with the government or the king. Bitcoin is just that. That’s part of the appeal.
But Crypto regulation is a different beast. Laws stand at the border. A political issue. Most countries are still struggling with how to deal with this strange invention — unsanitary technology in a legal box. Thus, regulation is its own kind of global experiment. Because every country is doing its own business more or less, what is the work? You can see all over the world with your eyes on what doesn’t work.
This is part of CoinDesk. “Policy Week.”
As a thought exercise; What if we could cherry-pick the smartest crypto rules from around the planet? What can be emulated in the US?
A few caveats: First, The U.S. has some unique regulatory challenges that make crack more difficult. “We have a fragmented regulatory system. We do not have a unified regulatory system in the way some jurisdictions do; They don’t have a taxonomy that makes it easier for them to respond to innovations that don’t fit into pre-existing product boxes,” said Timothy G. Massad, a senior fellow at Brookings who conducted the study. crypto regulation.
Read more: Jesse Hamilton – After FTX: How Congress Is Preparing to Regulate Crypto
This means that it is impractical from a practical point of view to incorporate some sort of “greatest harms” into international policy. “Frankensteining [or patching together of legislation] Sheila Warren, CEO of the Crypto Council for Innovation and co-host of CoinDesk’s “Money Reimagined” podcast, says that will never materialize. Although Warren does not believe that any universal laws can be codified, “I like blue-sky thinking and I like the concept.”
So the spirit of this experiment is more of an idea than a true roadmap. And it’s true that almost every expert I spoke to emphasized that no country has a silver bullet to fix the rules. “It’s too early to tell,” says Michael Piwowar, executive director of the Financial Markets Center at the Milken Institute. “We’re in the early innings.”
But the early game is for guesswork. Isn’t it the perfect time to challenge our views and have a little fun? (Crypto is also the only topic in the world where “global regulatory policy” can somehow be viewed as “fun”.)
So let’s take a quick look at what experts think about the regulatory world.
Warren likes Japan’s fungible tokens (NFT). “I think the process is really thoughtful. They’re looking at people who consult with the right stakeholders and create,” Warren said.
Ananya Kumar, Associate Director of Digital Currencies at The Atlantic Center, an organization that tracks international crypto regulation, said that Japan is struggling with how to set good regulations. “The Bank of Japan has basically formed associations that will help them clarify crypto activities and the economic activities of these businesses,” Kumar said.
It is also true that Japan has a history of some crypto regulation. In 2015, a significant Mt. Gox exchange was hacked, the country instituted consumer protections, so JP Koning, writing for CoinDesk, argued that “Japan is the safest place to be an FTX user.”
“MiCA [the European Union’s upcoming Markets in Crypto Assets policy] It wasn’t a complete piece of legislation, but one of the things they did was focus on centralized intermediaries,” said Kristin Smith, CEO of the Blockchain Association. “I think that’s very positive.”
Massad also likes “MiCA episodes”; I especially like his approach to Stablecoins. Massad said, “I’m not saying it verbatim, but they are bringing stablecoin activity within the regulatory framework… [in the United States] We’re trying to get out of the traditional banking business and comply with the laws of the state.”
Read more: Jeff Wilser – ‘What Gary Gensler Really Does’ – Rep. Tom Emmer at FTX Next for Crypto in SEC and Congress
Both the EU and the UK have a legal framework for electronic money, Massad said. but imperfect; At least “it’s a starting point and you can build from there.”
So why is it important? “We [in the United States] A basic e-money law is needed. We don’t have one. We generally do not have a good framework for regulating payments; So the rules are “state laws that have been on the books since the age of the telegraph,” Massad said. Therefore, Massad says, developing an electronic-money legal framework is “a precursor to addressing crypto challenges.”
Kumar likes that Mexico is looking to “create regulatory sandboxes” to more safely test policy solutions. Kumar added, “Regular sandboxes are an interesting way for countries to work with the private sector, form public/private partnerships, clarify big questions about crypto, clarify assumptions about crypto, and then get into the business of regulation.”
Sandboxing is controversial ( here’s a primer ); But it does provide an “inclusive environment to run experiments,” she said. In the case of Mexico, Regulators are going back and forth over what should be the role of traditional financial institutions in crypto. Should they be allowed to trade? Hold them? To generate stable coins. They hope to find answers in these regulatory sandboxes.
If the box of rules still seems a bit confusing, consider the case of Canada. Kumar points to Canada’s use of a sandbox to help figure out how to regulate exchanges. “Wealthsimple became the first exchange to be licensed in Canada to come out of that regulatory sandbox,” says Kumar. or as explained by the Canadian Securities Administrators on its website; The regulatory sandbox allows companies to “test their products, services and applications across the Canadian market for a limited time.”
“Anytime a country provides a framework for centralized intermediaries to register with the government, it provides a relatively favorable environment,” said Smith of the Blockchain Association.
Or, as Piwowar puts it, Singapore “wants to be the London of Asia” for fintech regulation in general. They want a safe regulatory environment that will propel Asia.” Piwowar notes that Singapore has a chief fintech officer (Sopnendu Mohanty), which signals that the country is open for business for entrepreneurs. For someone looking to start a company, “they’re one-stop shopping,” Piwowar said, which is very different from the United States.
Switzerland’s approach is similar to Singapore’s, Piwowar says – so you have a lot of crypto companies and foundations based in Zurich and Zug.
After that, As a bit of added nuance, Sheila Warren suspects that Switzerland’s crypto-friendly reputation is starting to fade. Their approach to making it easy to set up shop was “pretty smart at the time,” says Warren. So what’s the fuss? “We’re a long way from that,” she said. “Now we’re talking about regulatory actions. She called the Swiss foundation model the best in class at the time, saying it was still useful, but cautioned that it was “for one thing in particular.”
Finland (especially Helsinki)
“To be honest, the right places are the slow places,” Warren said. “This is a complex area.”
She later cited Helsinki as an example of a thought experiment that could pave the way for good policy. “What Helsinki actually thought about is data and data trust and data governance, which is really important and really interesting and people never talk about it,” Warren said.
Warren knows she’s biased — she’s part of the World Economic Forum team leading the project — but says Helsinki has piloted a “data policy” to help creatively organize public data in a way that preserves privacy. . Helsinki is “thinking of a time when blockchain is part of the architecture of the system,” Warren said. “It’s forward thinking. That’s what I’m looking for.”
Read More: Ben Khila – ‘We haven’t seen anything yet’ – introducing CoinDesk’s ‘Policy Week’.
Ananya Kumar described Thailand’s new regulations as “more comprehensive than those in the US and other countries” and likes that they “have the beginnings of consumer protection regulations”. “Consumer protection is really difficult,” he said, but congratulated Thailand for trying.
She also appreciates Thailand’s handling of stablecoins, as the country considers them “e-money payments”. “This is legal; They allow There’s a regulatory body that controls that. It can be used for payment.”
United Arab Emirates
“They’re experimenting and trying new things,” said Michael Pewawa of the Virtual Assets Regulatory Authority, referring to Dubai’s introduction of VARA. “They want to be a meeting place not only in the Middle East but also for Africa and other places in the region,” Piwowar said. The UAE has established zones with common law jurisdictions, and “Both Abu Dhabi and Dubai have been very successful in attracting businesses in financial services in general, and fintech in particular, which is now moving into virtual assets.”
Regarding the Bahamas, Warren said of the FTX fiasco: “Boom, it’s done, let’s go home. I have to say.”