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Global regulation of the cryptosphere: is that possible?

26 June 2018 00:00, UTC
Global regulation of the cryptosphere: is that  possible?
By Margaret NAIL
The expert community is constantly discussing the issue of creating a global cryptosphere regulation that will help governments to control the emerging digital financial system. Crypto supporters believe that crypto community and international regulation (yes, as well as a local one) are basically incompatible things. Which side is right? Bitnewstoday tries to find out.

20.06.2018  |   in Regulation

Supporters of crypto believe that society will never see the global regulation of the cryptosphere. This is not only technically impossible, but also contrary to fundamentals the crypto world is based on. Jeff Koyen, representative of 360 Blockchain, comments: “Though we've witnessed massive consolidation of internet providers and gateways in the past 20 years — and this, too, was unimaginable to the internet's earliest pioneers — the internet is not globally regulated. In most parts of the world, it's still technically possible to fire up a website, no matter what your own or a neighboring government has to say”.

A similar opinion is shared by Kristoffer Nelson, co-founder, and COO of SRAX and principal of the BIG Platform. The expert believes a global system of crypto-regulation will hardly be created because there are no global safety standards at the moment. “I don’t think this will happen. We don’t currently have global securities standards. These isn’t an organization that could enforce this. However, there could be symposium of nations, like the G20 that mutually enforce agreed policies”.

Louis Adimando, a former Wall Street lawyer who is now the co-founder and Chief Strategy Officer of the Praetorian Group (PAX), suggests that the formal leadership of the crypto sphere can be formed within the framework of the forthcoming "Big 20" summit, where one of the sessions will be devoted to cryptocurrencies. However, the global structure, which will act like "a guard dog" of the industry, is unlikely to be created, according to the expert. “At the upcoming G20 summit, there will be sessions on cryptocurrency, out of which I would not be surprised if more formal guidance eventually emerges. I do not believe there will be a worldwide framework or regulatory body set up to act as a watchdog of the industry; it is more likely to remain a country by country regime similar to current securities laws. As with securities, I expect the rest of the world to follow the United States regulatory approach to cryptocurrencies, as the US is the leader when it comes to financial markets regulation”, the expert noted.

Federal Ministry of Finance (Germany) stated that the topic of "crypto-tokens" was included in the agenda of the G20 due to the joint initiative of France and Germany in April 2018. G20 urged international standards bodies (SSBs) to continue monitoring crypto assets and their risks, in accordance with their mandates, and, if necessary, to evaluate multilateral responses. The Financial Stability Board (FSB) asked the G20 to inform about the results of its investigation of the crypto-token market in July 2018. The G20 works together with other SSBs, including CPMI and IOSCO, and FATF.

Nick Spanos, a founder of Bitcoin Center NYC, believes that governments don’t even need to try to create a worldwide crypto sphere regulation system. In any case, as the technology of the blockchain and the crypto sphere develops, the governments will lose some of their powers, whether they like it or not.

Specialists from the real economy sector follow a slightly different point of view and believe that the crypto sphere, like any other market, needs to be regulated. In their opinion, the crypto sphere is just one of the issues related to the digital economy and the digitalization of business, which should be solved at the international level.

Loretta Joseph, OECD Think Tank Leader, Shyft senior advisor and Chair of the Australian Digital Chamber of Commerce Advisory Council (ADCA), believes that crypto industry should be regulated globally. The expert said: “If we can start to regulate now in several jurisdictions at the same time, we will be able to set a standard that can help avoid jurisdictional arbitrage. Bermuda, Malta and Mauritius are beginning to implement these regulations that can also be adopted by other countries. The ecosystem can then foster a common standard and other jurisdictions will be more comfortable following their example”.

Denis Filippov, a head of the payment systems department of the Bank of Latvia, believes that the creation of general regulatory guidelines in the crypto sphere is a matter of time. According to the expert, the regulation of the cryptocurrency system should be innovative and flexible enough to mitigate the risks. The crypto sphere is developing rapidly, and traditional regulatory instruments may prove ineffective. "Technical standards, guidelines, and best practices can form the basis for innovative regulatory approaches applied to activities in the crypto sphere. There should be a general political and economic agreement on the interpretation of crypto active assets and other crypto tools in order to create a global regulatory system. The number of international organizations, such as OECD, has already included this topic on its agenda", the expert said.

Whether governments will be able to tame the crypto sphere or not — time will tell. In any case, the world will receive a new experience of interaction between decentralized and centralized systems. Bitnewstoday will continue to follow the events and will inform our readers about the outcome of the G20 summit session on the subject of cryptocurrency.

All materials presented on this site are provided to you for informational purposes only

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