‘Something must be done!’ The crypto regulatory challenge for 2023

IN VIEW of their commitment to stakeholder capitalism and globalisation, it was unsurprising that delegates at the World Economic Forum gathering in Davos were not enamoured of the threat to international harmony allegedly posed by the anarchic crypto ecosystem. It is also hardly shocking that the preferred solution was a universal, comprehensive, standardised regulatory system based on the existing financial regulatory architecture, applying to all market participants, governments and customers.

The underlying regulatory principle ought to be “same activity, same risk, same regulation”, echoing the Financial Stability Board’s calls for regulatory equivalence between conventional and crypto financial instruments. This also has the unintended consequence of cementing the existing advantages of industry incumbents. It all has interesting echoes of Britain’s attempts as the owner of the world’s largest navy in the mid-1800s, to prevent the development and introduction of the submarine.

Clearly this would require some new regulatory agencies, more supervisors and a raft of new laws and regulations. At best, it would be a global, technocratic system that trumps the inconvenient rough edges of national borders and political preferences – something not dissimilar to the European Union’s Markets in Crypto-Assets regulation due in spring, which aims to set the global standard for crypto regulation.