Experts call for cryptocurrency regulation

A panel of sector experts agreed unanimously at Money 20/20 Europe that cryptocurrencies need to be regulated if they are to ever gain mainstream acceptance and investment growth.

A session trying to answer the question of how the emerging asset class should be viewed – currency, commodity, utility or security – found consensus that a definition was a good place to start for global authorities.

“I know that in a lot of circles, regulation and crypto don’t go together, but for any market to gain volume, institutional investors need to be involved and they’re currently cautious due to a lack of regulation – they need a stable framework to manage counterparty risk and risk to consumers,” stated Teana Baker-Taylor, chief marketing officer at Coinfloor.

“We’re currently talking about these assets with different vernaculars, so we’re going to need a common taxonomy and interoperable frameworks to move forward,” she added.

Ripple’s chief cryptographer David Schwartz agreed that regulation is essential, arguing that “one of the biggest drags on adoption is uncertainty, so people don’t know if what they’re doing is illegal or not, as there are different laws in different jurisdictions and different interpretations of things”.

Patrick Byrne, chief executive and founder at Overstock.com, was clear that anything which at any point in its lifecycle is deemed to meet the criteria to be a security, needs to be regulated.

“If you raise money from the public without following the rules, the SEC [Securities and Exchange Commission] can come along 20 years later and dismantle your business and everything you’ve built. If you’ve taken investor money and there’s an expectation that you’re going to be delivering something, then that’s a security,” he commented.

“The regulators are coming, there’s increasingly clearer signs since the DAO decision last year,” Byrne added, referring to the SEC deeming digital asset DAO Tokens as securities in July 2017 and cracking down on them.

In a similar session at the Amsterdam-based event, Judith Rinearson, a partner at K&L Gates, said it’s been a rollercoaster of a year so far in the US.

“A year ago ICOs [Initial Coin Offerings] were making their way across the US, then the DAO decision in July meant there’s no such thing as a utility, they’re all securities, which really put a chill on ICO side of things,” she said, adding: “The US is now very highly regulated, which is putting people off – it’s seen as a difficult place to do business.”

This was echoed by the audience, who were asked to state which country they would most prefer to launch an ICO in, with Denmark and Gibraltar coming out top, while the US and China were least popular.

Richard Teng, chief executive at Abu Dhabi Global Market, said that their regulatory approach is not complicated by the legacy issues facing US regulators.

“It appears this asset class is here to stay, so we’d better get serious about regulating it – since the start of the year the Bank of England, the International Monetary Fund, the G20 and others have all made noises to that effect,” he added.

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