The World Economic Forum, in collaboration with the Digital Currency Governance Consortium, published an article on the regulation of crypto assets. The international organization published the article titled “Paths to Cryptocurrency Regulation: A Global Approach,” highlighting the urgency of regulation and the importance of global cooperation to avoid inconsistent enforcement, regulatory arbitration and uncertainty. Here are the details…
WEF publishes cryptocurrency report
The authors acknowledged that there are a number of challenges in regulating cryptoassets, including the “same activity, same regulation” issue, noting that such assets do not always fit within the current regulatory framework. According to the report, “The crypto-assets ecosystem does not always fully comply with the current activity-based, agent-driven regulation approach, even where crypto-asset activities reflect those in the traditional financial sector.”
Noting that the anonymity of crypto mixing services, individual wallets and decentralized exchanges further complicates regulation, the report added that the crypto industry’s growing interdependence with traditional finance poses potential contagion risks. The report proposes various classifications of regulatory frameworks that facilitate comparison, including outcome-based and risk-based regulation.
The authors urge policymakers and industry stakeholders to work together across jurisdictions to create better regulatory tools to address cross-border concerns, given the transparency of these new technologies.
WEF report criticizes US
The report suggested that legislators should avoid regulation by enforcement, allegedly preventing the establishment of a functioning regulatory regime. The WEF also noted that the United States is the only country that has resorted to regulation through sanctions. “This approach is not recommended for establishing a framework. Because ‘regulation by sanction’ precludes any meaningful discussion of what should and should not be regulated,” he said.
Regulators in the US, particularly the US Securities and Exchange Commission, have put aggressive pressure on the crypto industry after the catastrophic collapse of cryptocurrency exchange FTX, as we reported on Cryptokoin.com last year. So far this year, the agency has taken action against a number of individual actors accused of manipulating crypto assets, including crypto exchanges Bittrex and Gemini, crypto lender Genesis and crypto entrepreneur Justin Sun and Terraform Labs founder Do Kwon.
Recently, the SEC also sent a “Wells notice” to Coinbase, threatening the crypto exchange with legal action regarding certain listed crypto assets, staking service Coinbase Earn, Coinbase Prime, and Coinbase Wallet. The report made three broad recommendations to international organisations, regulatory authorities and the crypto industry, emphasizing best sharing and coordination practices. “Policymakers and industry stakeholders should collaborate across jurisdictions to ensure consistency and clarity,” the authors wrote.
59763
