- Central bank leaders at the WEF in Davos agreed on the need for comprehensive crypto regulation.
- This regulation may be welcome by industry leaders as they have been clamoring for this for a while.
A good number of Central Bank and financial market leaders have expressed their take on how important it is for crypto regulation to be introduced in various jurisdictions.
Speaking at a panel at the World Economic Forum (WEF) event in Davos, Tharman Shanmugaratnam, chairman of the Monetary Authority of Singapore (MAS) said he is concerned about regulating crypto and as a result, legitimizing an industry that is highly speculative and unsafe for investors.
Many other leaders hinged their stance on Tharman’s position, showcasing how generally skeptical these banking veterans are in regulating the emerging and “inherently speculative and, in fact, slightly crazy,” industry as the MAS boss puts it.
Since the introduction of Bitcoin (BTC) by Satoshi Nakamoto in 2009, governments around the world have been very concerned about the regulation of startups offering services in the space. At the Davos event, the Central Bankers all agreed that at the very least, the required regulation should border on Anti Money Laundering, (AML) and Know Your Customer (KYC).
François Villeroy de Galhau, the governor of the Central Bank of France also supported this notion adding that the core basis of regulation has to be applied to every token that is in circulation in the industry. Colm Kelleher, the Chairman of Swiss multinational banking firm, UBS was critical in his own assessment of crypto regulations.
According to him, any digital currency that cannot successfully align with the provisions of anti-money laundering and investor protection checks is not fit for circulation. In fact, he said crypto outfits “cannot justify selling that product as its currently constituted.”
In all, Tharman submitted that it may actually be better if the masses are left to invest in the industry based on their sole discretion.
Crypto Regulation: Impact on Growth
Many proponents of cryptocurrency and Web3.0, in general, have been clamoring for new regulations to be introduced across the board. Experts believe that proper encompassing regulation will offer good stability to the industry and prevent issues of collapses seen across the board.
While the industry players in some regions like Switzerland, Hong Kong, and Germany with relatively clearer crypto regulations have no issues, other areas with undefined laws are still largely susceptible to different forms of scams.
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Over the course of last year, we have seen the collapse of the Terra blockchain ecosystem as well as its two flagship digital currencies LUNA and TerraUSD (UST) respectively. Besides this, we have seen the bankruptcies of crypto lenders like Celsius Network, Voyager Digital, and BlockFi, and the recent implosion of FTX Derivatives Exchange notably showcased how frail the ecosystem is and how it could benefit from functional regulation.
While there is a common denominator for all of these firms is a liquidity crunch, many, like FTX, have uncoordinated internal control and their financial state was not subjected to comprehensive auditing until it was too late. A properly structured crypto regulator will resolve this bad business practice and help position companies that survive this long protracted crypto winter on a good path for growth.