The coming year will prove to be a pivotal year for digital assets, especially when it comes to the divergent views around the regulation of digital assets. As of early September 2024, the total market capitalisation of cryptocurrencies, one type of digital asset, was valued at $2.01 trillion and stablecoins comprised 8.5% of this market, amounting to $171 billion, a report by the World Economic Forum shows.
When it comes to the status of regulation globally, according to a recent Bank for International Settlements (BIS) survey, two-thirds of the 86 jurisdictions surveyed were or will soon be regulating digital assets. The main goals of implementing regulation are to protect investors and consumers and maintain financial stability.
‘Although there has been recent progress in digital asset regulation, countries are taking divergent approaches and have established different timelines for creation and implementation,’ the WEF said.
‘Each jurisdiction is developing regulations based on unique goals and objectives, which risks a lack of coordination globally. With these varying approaches, it is imperative that stakeholders collaborate to forge a secure and equitable regulatory environment. This necessitates the sharing of learnings from global regulatory experiments, identifying both successful policies and shortcomings,’ it said.
Looking ahead
The group suggests policymakers focus on the following key areas in the coming year:
- AML and KYC: Building on existing AML/KYC foundations, focusing on the adoption of technology-enhanced solutions, global cooperation, and training and compliance programmes, to help create a more secure digital assets landscape in the future.
- Regulatory and technical sandboxes: Implementing clear sandbox objectives and support mechanisms and enabling the collaborative participation of diverse and broad networks in sandbox environments.
- DeFi: Prioritising the need for risk mitigation and transparency as well as tailored licensing models and clear definitions to refine these regulations in a controlled setting without compromising the unique nature of DeFi and its technological advancements.
- Privacy and security: Underscoring the need for strong data protection policies that prioritize the consumer and include regular security audits and compliance checks to safeguard personal and financial information.
BSV Blockchain is pro-regulation
BSV Blockchain is pro-regulation and believes that the global adoption of blockchain technology requires enterprises and lawmakers to become comfortable with legal compliance by industry participants.
To ensure the development of a regulatory environment that both fosters lawful conduct and facilitates innovation, the BSV Blockchain regularly engages with leading policymakers to advise on the development of positive policy.
We believe that regulation provides clarity on legal obligations, encouraging compliance, good governance, and accountability. It also fosters innovation and market development by providing a clear legal framework, building trust, and attracting investment.
