How to make the digital asset markets grow
A Future of Finance interview with Gilbert Verdian, CEO of Quant.
The time in which regulators observed rather than intervened in digital asset markets is now over, and regulators are starting to work with the private sector to design effective regulations that match the pace of technological development, but progress would be much faster if a single regulator was given responsibility for digital finance.
The reliance of traditional finance on national forms of regulation is ill-suited to the genuinely global and highly mobile digital asset markets, as the constant migration of cryptocurrency exchanges in search of accommodating jurisdictions proved, so a major jurisdiction needs to establish a minimum standard all jurisdictions can support.
The principal benefit of regulatory sandboxes is not to produce Unicorns or drive the reform of existing regulations but to prove that existing regulations are adequate to the task of regulating digital assets, which is of greater value to institutions that are regulated already than to new market entrants whose businesses test existing regulations.
Experience has shown that existing frameworks of law are adaptable to novel conceptions of property such as natively digital assets, but at this nascent stage in the development of the digital asset markets, the flexibility of the law is less important than a clear line between what is acceptable within the law already and what must await the further evolution of the law.
Governments can influence the rate of growth of the digital asset markets directly by encouraging equity investment in smaller companies and issuing government bonds in tokenised form, which would have knock-on effects in encouraging atomic settlement using tokenised central or commercial bank money as the cash leg of the transaction.
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#digitalassets #regulation #fintech #tokenization #govpolicy
