The Challenge of Compliance
Needless to say, compliance within this changing landscape has become ever more treacherous.
The FTX fiasco is cited by many as a trigger to the regent regulatory crackdown. For many, the company’s extensive evidence of fraud was a result of the regulatory grey area that covers digital assets.
The technology behind crypto has been accepted as a vehicle to address pain points in the banking system. Incumbent institutions have continued to invest in technology even in the wake of FTX.
Dan Doney, Founder and CTO of Securrency explained that he had seen an influx in interest following the FTX fall, “We’ve seen a tremendous increase in the interest and actual willingness to execute from financial institutions in the new Web3 world.”
“Rather than discouraging our institutional partners, this has actually dramatically accelerated their commitment to using blockchain tools and their desire to move out.”
While the interest is there, the ability to be compliant within the regulatory fog could be restricted until fundamental components are decided.
“The worst thing that can happen now is regulatory uncertainty,” said Gregory Mall, Head of Investment Solutions at SEBA Bank. “Where you’re not sure whether or not you can actually perform a service and charge for that. That’s something that should be avoided at all costs. So even if it’s a harsh regime, it’s better to have some clarity on it.”
He and many others in the space believe that the fundamentals are already there for compliance.
“The rules are actually fairly straightforward, applied globally, regarding investor protection, fair markets, the need to disclose large transaction moves, tax disclosures, etc. Nearly everyone agrees on that,” said Doney.
“What you see now is regulators recognizing the need to regulate the unregulated things. So regulatory uncertainty in this whether or not the blockchain is blockchain, whether or not crypto instruments are a security or not a security is only an edge scenario.”
