Global Crypto Industry Wants Regulators To Scale Up Engagement With Sector

Global Crypto Industry Wants Regulators To Scale Up Engagement With Sector

SAUDI ARABIA-RIYADH-G20 (G20 Saudi Arabia/Handout to Xinhua via Getty) (Xinhua/ via Getty Images)

This week, the V20 Summit convened crypto industry leaders and the Financial Action Task Force (FATF), with industry regulators, in a three-day virtual conference to share views and feedback on the progress of the implementation of the Travel Rule in advance of the November G20 Riyadh summit.

The engagement is a global use case for industry and regulatory collaboration and agile execution of policy in the crypto asset sector. G20 ministers might wish to take note.

David Lewis, Executive Secretary & G20 Deputy at FATF commented, “I am at the V20 Summit today to hear about all the innovative ways this growing sector is rapidly developing, including to comply with global standards. 

“We need to work together to protect virtual asset service providers from crime and terrorism, and to enable safe, reliable and cost effective payment options for us all.”

Following the inaugural V20 Summit in Osaka last year, industry came together to deliver the IMVS101 data payload standard. The standard was delivered in a record 18 weeks by an independent joint working group (JWG) comprised of 130 technical industry specialists brought together by the three global members associations, the Chamber of Digital Commerce, Global Digital Finance, and IDAXA and independently co-chaired by Sian Jones, a senior partner at X-Reg Consulting, a regulatory advisory firm.

The standard has been globally adopted by Technical Service Providers (TSPs) delivering solutions to Virtual Asset Service Providers (VASPs) to help them meet the Travel Rule Requirement most of whom are up and running and report they are on the last mile to meet the June 2021 deadline for implementation.

A common criticism of policy makers and regulators of the crypto industry is that it has no single voice and is a fragmented and disparate group of factions. For a sector that now serves a global client base across many asset classes, this is a bit of a glib assessment given the diverse and competitive nature of digital finance, however, the industry recognised this criticism and responded.

The global crypto industry can come together with a unified and single voice when it needs to, and IVMS101 has demonstrated this in spades, to the surprise of many.

FATF and regulators reported that the majority of participating countries are on track for the deadline, though COVID-19 may still create some delays. Sunrise issues concerning how and when jurisdictional regulators around the world will adopt and implement the Travel Rule are still being worked through, and this is a cause of concern for VASPs keen to seek the equal application of requirements across jurisdictions they conduct business.

“Both the industry and regulators have one thing in common – rid dirty money from the system. The difference between industry and regulators is that we know the tech more than them. And from face value, this technology is very disruptive, and it is the industry’s ultimate responsibility to work with regulators to come to an understanding.” Said Anson Zeall, IDAXA chair and V20 co-convenor.

There is speculation that more regulatory headwinds are coming for the sector for global stablecoin regulation. This is not surprising given the Financial Stability Board’s 2020 Consultation and the Bank of International Settlements whitepapers.

The DeFi sector is also under the gaze of global authorities given the rapid growth of the sector with estimates of $14 billion locked in the DeFi market, a figure that has doubled since July 2020. Issues around the risks to consumers are being raised with the P2P lending segment, and the role of non-custodial wallets are again in the spotlight.

G20 ministers would be advised to look at the success of the industry regulatory engagement model with FATF, and seek to engage a wider selection of the industry specialists even earlier with DeFi to deliver better data and fact driven evidence in advance of reaching early conclusions.

Retrofitting the last industrial era regulatory thinking and policy onto the 21st century digital world and its new and innovative solutions is not always helpful and may be a hinderance, or worse, wholly ineffective in a world where digital crime can scale as quickly if not faster than digital innovation with great social utility.

The DeFi sector will also have to step up the maturity of its engagement with policy makers and regulators. Rolling out the same platitudes as the early days of the blockchain is unlikely to influence policy makers. Tim Berners Lee set out to democratize knowledge with the world wide web for the benefit of society. I doubt he intended for social media to run a business model that profits from incentivizing social division through user generated content delivered by anonymous identities and fracturing western democracies.

Policy makers and regulators are well aware of the advantages that digital technologies can deliver, but remain optimistically cautious about the unintended consequences of all of the digital goodness on offer for society, especially when it comes to retail customers, or risks to the overall financial stability of the system. This is exacerbated when the narrative is that no person or entity is in control and that an algorithm embedded in an obfuscated quasi-legal structure will take care of things.

Malcolm Wright, GDF Advisory Council Chair and Chief Compliance Officer at 100x Group commented, “Above all, this year’s summit was a good reminder that we need to continue to further engage with regulators in this space. 

“We need to work with regulators to deepen the mutual understanding of various technical topics, including DeFi, while working as an industry to be solution-focused when it comes to our regulatory responsibilities. As the industry and regulations evolve, we have a shared interest in responsible innovation in order to realise the full potential of this sector.”

Very often, the principal focus on the development of policies, perimeters, and regulations is overly consumed with a shift of responsibilities – to be able to hold a single entity or entities to account for culpable wrongdoing, liability, and punishment.

Every now and then, the development of new (and innovative) policies, perimeters, and regulations result in a meaningful form of compliance that is focused on risk transparency for financial services products that work universally for everyone.

The industry regulatory engagement established between the global crypto sector and FATF, through open dialogue and mutual respect, is on the road to creating meaningful compliance. There is still a long way to go, but what an outstanding start in just over a year.

Says Lewis, “As a policy-making body, the FATF needs to understand the implications for business on the ground. It is in our interests that businesses operate under reasonable standards that work in practice. To achieve this, we engage in continuous dialogue with each other.”

G20 ministers should take note of this successful model. Regulators should scale-up their industry engagement and come together and make room in their digital sandboxes to scale up the crypto and digital assets sector, a sector that offers great promise for financial services into the 21st century that benefit everyone.

Source: www.forbes.com

Author: Lawrence Wintermeyer


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South Africa Unveils New Crypto Rules as Usage Soars Exponentially – Crypto Money Daily

South Africa Unveils New Crypto Rules as Usage Soars Exponentially – Crypto Money Daily

The South African financial regulator has published a draft declaration of crypto assets as financial products. The regulator says South Africa has experienced “an exponential increase in the provision and use of crypto assets.”

South Africa’s Financial Sector Conduct Authority (FSCA) announced Friday that it has published “a draft declaration of crypto assets as a financial product under the Financial Advisory and Intermediary Services Act [FAIS].” Comments on the draft declaration can be submitted until Jan. 28, 2021. The regulator wrote:

Globally there is rapid growing interest by retail investors to purchase crypto assets. South Africa has also experienced an exponential increase in the provision and use of crypto assets.

The draft declaration incorporates some recommendations for the regulation of cryptocurrency as a financial product under the FAIS Act from a position paper published this year by the Crypto Assets Regulatory Working Group (CAR WG).

The new rules apply to cryptocurrency service providers, including crypto exchanges, advisors, and brokers. They will have to register with the FSCA as financial services providers (FSPs). The FSCA detailed:

The declaration would have the effect that any person furnishing advice or rendering intermediary services in relation to crypto assets must be authorised under the FAIS Act as a financial services provider.

What cryptocurrency will become the main one in a year?
BitcoinEthereum

The financial regulator clarified: “The draft declaration in no way impacts the status of crypto assets in the context of other laws … nor does it attempt to regulate, legitimize or give credence to crypto assets.”

“The draft declaration is merely intended to be an interim step in mitigating certain immediate risks in the crypto assets environment, pending the outcome of broader developments currently taking place through the Crypto Assets Regulatory Working Group (CAR WG), which will inform future policy interventions to be implemented across a variety of regulators and laws,” the FSCA described.

What do you think about South Africa regulating crypto assets? Let us know in the comments section below.

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Source: cryptomoneydaily.com


Global Crypto Industry Wants Regulators To Scale Up Engagement With Sector


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