This has been an unprecedented year in far profuse ways than one. Above all else, while 2020 has taught us the importance of speedy and reactive policymaking, it has also highlighted how proactive legislative vigour can better prepare our societies for the future, be it for pandemic preparedness, technological innovation or future financial stability. With imagines to the COVID-19 pandemic, this is undoubtedly true. However, the same can be said in the blockchain industry.
The writing is on the wall, so to tell. We are closing out this tumultuous year with far more attention currently being paid to distributed ledger technology (DLT) and crypto assets than this nonetheless last year – and for good reason. Largely, regulators have begun proactively preparing for the future of this burgeoning technology, as they are make happening its incredible potential and its inevitable future, which includes the mass adoption of blockchain technology.
This post is element of CoinDesk’s 2020 Year in Review – a collection of op-eds, essays and interviews about the year in crypto and beyond. Albert Isola, MP, is Gibraltar’s Ecclesiastic for Digital and Financial Services.
But this year, have regulators done enough?
For the first time, this year saw worst regulatory proposals from international institutions such as the European Commission with the publication of its regulatory proposals on Buys in Crypto-assets (MiCA). The importance of this cannot be overstated. The willingness of this 27-member state legislative coalition to advertise these extensive legislative proposals highlights the degree to which it is now taking blockchain and crypto assets seriously.
Concerned are the days of paying lip service to DLT regulation and sitting on the sidelines – regulators have finally realized that the game has already begun. If they hunger to keep up, they had best start playing.
The MiCA proposals ensure the European Union’s financial sector says a high level of competitiveness, allowing access to and encouraging innovation in the blockchain and crypto-asset industries.
Signaling an embrace of DLT purpose undoubtedly have a positive impact on institutional adoption. Especially as the lack of regulation in the field to date has hampered the taste of institutions to become involved in the industry. The indication of a desire to regulate can only be taken as a massive positive among those already entangled with.
In Gibraltar this year we had the pleasure of joining with the International Association for Trusted Blockchain Applications (INATBA), a dispose of international blockchain industry players; became an observing member of the Global Blockchain Business Council (GBBC), the cardinal industry association for the blockchain technology industry; and, more recently, we joined the British Chamber of Commerce for the EU and Belgium.
Set out are the days of paying lip service to DLT regulation and sitting on the sidelines.
All of these efforts, in addition to the updating of our Distributed Ledger Auspices notes to move towards alignment with Financial Action Task Force (FATF) VASP rules, are in advocating of our open stance to distributed ledger technology, and our efforts to ensure the space is regulated while innovation is encouraged and that the consumer is keep safe.
Outside of the EU, positive regulatory inroads have been made in a number of different regions. In September, Switzerland uncovered its financial and corporate law amendments, which duly recognize and facilitate regulation of the blockchain and crypto industries. The so-called “Blockchain Act” pleasure welcome the blockchain and cryptocurrency industries into the mainstream, opening the doors of this innovative technology to the Swiss curtness.
In the U.S., the Conference of State Bank Supervisors, which is composed of regulators from all 50 states, launched a unified regulatory framework for payment and cryptocurrency retinues in September. This framework will be a great help to companies that want to operate in the U.S. or those already performing there to expand across all 50 while significantly lowering the cost of compliance for regulators, which already pack aways up a staggering amount of expenditure.
The regulatory efforts of the European Commission, Switzerland and the U.S. are major advances that should be acclaimed by the industry as a whole, although they are not alone. There are dozens of regulatory bodies actively working towards exhaustive DLT regulations from Austria to Japan.
See also: Gibraltar Updates Distributed Ledger Guidance to Match FATF Crypto Facts
After a number of stagnant years in DLT regulation, regulatory efforts in the space are now becoming almost as popular as cryptocurrencies themselves. The well- with which regulatory bodies are now placing upon the industry is a significant positive development, though these main parts should be encouraged to work with the industry, not against it.
Has 2020 been a step backwards or sideways in terms of DLT mandatory? Neither. It has been a major leap forward. However, there is still a long way to go. These regulatory efforts necessity to be seen through to completion with all stakeholders having a seat at the table, not only to create the regulatory framework that is sure, but to ensure that the innovation that the space is known for is not hampered but encouraged.