The World Economic Forum (WEF) acknowledged the need for urgent changes in the regulation of cryptocurrency assets and stressed the key importance of international cooperation on this issue.
The WEF experts published a white paper “Pathways to the Regulation of Crypto-Assets: A Global Approach,” outlining the results of the analysis of existing approaches to regulating crypto-assets. The paper’s overall conclusions include the need for close cooperation between international organizations, government regulators, and representatives of the cryptocurrency industry.
The authors point out the urgent need for global regulation of digital assets, but it’s only possible with global coordination of efforts in this direction. This will minimize ambiguity in wording issues and prevent regulatory arbitrage and inconsistent enforcement.
In particular, the WEF criticized coercive regulation in the U.S., as it “precludes any meaningful discussion of what should and should not be regulated.” The “same activity, same risk, same regulatory outcome” principle, which is partially applied by British regulators, was also criticized. According to the paper’s authors, crypto-assets and their ecosystem don’t always fit into the existing regulatory approach, which is based on activities and intermediation.
Among the main factors that complicate regulation are high levels of user anonymity, which can be ensured by:
- crypto mixers;
- non-custodial wallets;
- decentralized exchanges.
However, the growing interconnection between the cryptocurrency market and traditional finance affects the corresponding risks to macroeconomic stability.
The authors analyze and compare various regulatory framework options for crypto market regulation. Switzerland and Japan are cited as the most advanced jurisdictions in this regard, with the principles of flexible regulation, co-regulation, and self-regulation.
The WEF’s general recommendations are to study existing practices and use them to develop strategies to regulate the industry at the national level and to cooperate internationally to create regulatory frameworks at the government and big business levels. Businesses are encouraged to have “a vital role to play to ensure global coordination in regulating crypto-assets by engaging with regulators.”
Just the day before, the International Organization of Securities Commissions (IOSCO) presented its set of global regulatory recommendations related to cryptocurrency regulation.
