What role will crypto regulation play, what type of regulation is required, and who will regulate crypto? These questions and more carried over into the discussions at the World Economic Forum (WEF) Annual Meeting 2023 in Davos, Switzerland, from 16-20 January under the theme of “Cooperation in a Fragmented World”.
Leaders from government, business, and civil society discussed the state of the world and priorities for the year ahead. Discussions included Blockchain technology, crypto and the metaverse. The need for both global coordination on crypto regulation and for governments to work together was echoed during the forum.
Whilst speaking during a panel discussion on “Finding the Right Balance for Crypto” at the 2023 WEF, Mairead McGuinness, Commissioner for Financial Services, Financial Stability and Capital Markets Union at the European Commission, said that crypto regulation should also be in place for the “good actors” as they can also make mistakes or when things go wrong.
On a similar note, in her address to a delegation in London on the EU Crypto Asset Strategy on December 5, 2023, McGuiness said: “We need to root out bad actors, provide consumer protection and ensure financial stability and market integrity”.
The President of the World Economic Forum Geneva, Børge Brende, highlighted the forum’s progress towards unlocking the benefits of frontier technologies. Brende announced that the WEF is launching the Centre for Trustworthy Technology in Austin, Texas, USA, aimed at promoting the responsible production and use of emerging technologies, including Artificial Intelligence (AI), Machine Learning, Blockchain, Virtual Reality (VR) and Quantum Computing.
One issue experts continue to highlight is the contrasting national approaches to crypto regulation. Some jurisdictions have opted for outright bans to certain crypto activities, whilst others have adopted a more welcoming approach.
At a December 9, 2022, address on regulating the crypto ecosystem, Bo Li, IMF Deputy Managing Director, noted that crypto asset service providers delivering critical functions should be licensed, registered, and authorised. Li, however, acknowledged that developing global standards takes time.
Meanwhile, Coindesk reported that the European Union’s vote on the Markets in Crypto Assets (MiCA) regulation will be delayed until April 2023, over translating the legal document into the EU’s official languages.
According to the PwC Global Crypto Regulation Report 2023, the Financial Stability Board (FSB) published a proposed framework and recommendations for the international regulation of crypto assets and global stablecoin arrangements. The FSB will review the progress of the implementation of its recommendations by the end of 2025.
As efforts are underway to put crypto regulation in place, we expect to see more coordination towards formulating a baseline global crypto regulatory framework. Variations to the baseline regulatory framework may be applied to address specific economic, social, political, technological, legal and strategic ambitions of the different regional blocs and individual nations.