Cryptocurrency regulations among various countries should be “harmonized…so that gaps don’t occur that are missed by regulators,” Elizabeth McCaul, a member of the European Central Bank’s supervisory board, said in 28 November remarks at the Financial Times Crypto and Digital Assets Summit.
The spectacular collapse of the FTX crypto trading exchange has been “quite a wake-up call” and shows that regulators need to be talking together, she added.
The European Union’s forthcoming suite of crypto regulations would have moderated the worst effects of FTX’s implosion but would not have prevented it, she noted.
“I’ve lived through many crises and one theme always comes up,” she said – “gaps in frameworks and oversight.”
In the U.S., Wyoming senator Cynthia Lummis has called for greater regulation of the sector and has cited FTX’s demise as a prod to Congress to move on the idea that exchanges and other platforms that manage clients’ assets need stricter oversight.
TRENDPOST: In October, a council of the European Union approved the Markets in Crypto-Assets Regulation. It establishes consumer protections, accountability by crypto firms, and addresses ancillary issues such as money laundering and environmental impact.
Almost a year earlier, in November 2021, the U.S. Congress included some crypto regulation in its Infrastructure and Jobs Act.
The act defines crypto as a “digital asset” and any person or entity that “transfers digital assets on behalf of another person” as a “broker,” subject to the same legal standards as broker handling stocks or mutual funds for clients.
TREND FORECAST: Individual countries are feeling their way toward regulating the blockchain world, which will result in a hodgepodge of rules, some of which are likely to contradict or conflict with others.
Governments will attempt to coordinate regulations globally but that effort will not be a priority; too many other crises already are at hand.
Instead, coordination will move in fits and starts, not being elevated to any kind of priority until crypto becomes a much larger player in the global economy than it is after FTX’s epic collapse.