Regulatory, political and legal developments impact the stability of both government currencies (fiat) and digital assets (crypto), so it is not surprising both markets remain fairly bearish with the multitude of announcements earlier this week. Kate Rhodes, KRC discusses.
Blockchain and digital asset regulatory frameworks continue to be put together at the rate of knots with Albania, China, Russia and Taiwan all announcing their future plans in this arena. The U.S SEC continues its active work on this topic, stating that it will house a new department providing guidance for companies considering tokenising their models. This will be especially helpful for ICOs in the event they are unclear whether or not their product is a utility or security token.
Policy and politics are interlinked so it is not surprising there remains to be a policy question mark over the UK, where the government’s ‘Special Crypto Task Force’ has been in existence since January 2018. This rather excitingly-named working group — a delta one trading desk or special forces organisation comes to mind — produced a report in September on blockchain and digital assets. The report’s conclusions will form the basis of future regulatory policy framework in the U.K. However, due to the recent political turmoil related to Brexit, the Conservative leadership crisis, and nervousness around the delivery of the Budget next week (Please may the chancellor Philip Hammond never mention blockchain and the Northern Irish Border again), the UK remains behind on its work compared to other jurisdictions, without any clear policy in place yet. As long as there isn’t a General Election any time soon, it is likely that the FCA, Bank of England and Treasury will have their work cut out for them next year, with regulation potentially making an appearance in late 2019.
There are continuing murmurs from think tanks and trade associations relating to the establishment of a new independent tech regulator, with an interesting paper published last week by the British think tank ‘Dot Everyone.’ Given the overlapping and gapping between regulation in the financial services, digital and technology industries, this seems like a sensible and timely proposal.
We cannot talk about regulatory and political developments without discussing trends in the judiciary so it should be noted that Dubai has announced it will house a special blockchain court, launched alongside Smart Cities. I am sure we are going to see several countries dedicating specific arms of the judiciary towards blockchain disputes, especially in the jurisdictions that have licensing frameworks already in place such as Malta, Gibraltar and Switzerland. Law firms must be sharpening their teeth as this means lots of future work for any decent litigators out there.
Finally, the debate continues whether blockchain and digital assets should be regulated by a code of conduct or legislative framework. In Japan, the local digital asset industry has been granted self-regulatory status, with the Japanese Virtual Currency Exchange Association being named as the designated organisation to oversee this code. Some jurisdictions hold the view that legislation provides a stronger framework than a self regulating code of conduct, however, at this stage it is probably more important that something is in place — and that it is fit for purpose — rather than nothing at all.
Stay tuned to this channel for further updates…
Kate Rhodes is a Regulatory Advocate and Political Advisor. She is also founder of KRC political and regulatory risk management and policy advocacy consultancy © KRC.
For more information please go to www.katerhodesconsulting.com