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WEF urges global cooperation for effective crypto regulation

In a recent white paper on Crypto asset regulation, the World Economic Forum (WEF), in collaboration with its Digital Currency Governance Consortium, highlighted the urgent need for Regulatory measures and emphasized the importance of global cooperation in addressing the challenges posed by cryptocurrencies.

WEF calls for global crypto regulation

The WEF paper stressed the necessity of global coordination to prevent regulatory ambiguity, inconsistent enforcement, and regulatory arbitration in the crypto asset space. It argued that the existing activity-based and intermediary-focused approach to regulation does not always align with the unique characteristics of crypto assets and their ecosystem.

One of the main challenges identified in the paper was the difficulty in regulating crypto assets due to the anonymity provided by crypto mixers, self-hosted wallets, and decentralized exchanges. The increasing interconnectedness of the crypto industry with traditional finance also raises concerns about potential contagion risks, particularly in light of recent market volatility.

To facilitate comparison, the white paper proposed several classifications of regulatory frameworks. These included outcome-based regulation, where the regulatory outcome is determined by the level of risk associated with an activity, and risk-based regulation, which adjusts the level of regulatory intervention based on the perceived risk level.

The body wants a clear and consistent approach to regulation

The WEF paper also advocated for agile regulation, which embraces a responsive and iterative approach, recognizing that policy and regulatory development should involve multiple stakeholders beyond just governments. Examples of agile regulatory approaches mentioned in the paper included regulatory sandboxes, regulatory guidance, and the issuance of no-objection letters by regulators.

While Switzerland’s Financial Market Supervisory Authority was lauded as an example of an agile regulator, the United States was criticized for its “regulation by enforcement” approach, which the authors deemed inadequate for developing a comprehensive regulatory framework.

The white paper put forward three broad recommendations aimed at international organizations, regulatory authorities, and the crypto industry. It emphasized the importance of sharing best practices and fostering collaboration across jurisdictions to ensure consistency and clarity in regulatory approaches. The authors also highlighted the potential for developing improved regulatory tools that address cross-border concerns, leveraging the inherent transparency of blockchain technology.



This post first appeared on Cryptopolitan - Blockchain And Cryptocurrency News, please read the originial post: here

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