The World Economic Forum (WEF) summit in Davos has witnessed representatives from nations and institutions across the globe discuss topics of importance.
Sources reveal that several global central banks and regulators have utilized the ongoing summit to call for an urgent rollout of basic regulations targeting cryptocurrencies like Bitcoin. The bankers at the summit opined that the evolving nature of the cryptocurrency sector and the speculative nature of digital assets means that regulators need to step in and enact the necessary laws.
The group at the summit led by Tharman Shanmugaratnam, a senior minister of Singapore, along with Francois Villeroy de Galhau, governing council member at the European Central Bank, and Colm Kelleher, chairman of UBS Group AG, an investment firm, agreed that the recent events in the crypto sector call for regulations.
According to Villeroy de Galhau, the recent events in the market, including the collapse of cryptocurrency exchange FTX and the performance of money market funds, can be linked to what he called “non-banks.”
In his words:
The greatest challenge today is non-banks. All of them have one common feature — they are all linked with non-banks. And here, we lag behind. It’s more difficult because it’s a very evolving landscape. So we should rush to some urgent non-bank regulation starting with cryptos.
In that context, Kelleher suggested that assets in the crypto space should be able to meet the “basic hurdle” of anti-money laundering. In this case, he noted that due to the inability of most cryptocurrency products to meet clear anti-money laundering checks, companies in the industry could not justify selling a currently constituted product.
Further, Kelleher expressed his bullish stance regarding blockchain technology, stating it is unstoppable. When asked about his clients, he said that UBS clients might be interested in exploring crypto products, but the organization wishes to wait for regulation before taking a step. He said:
“We are looking for a regulatory framework that will allow us to accommodate that for our clients.”
Notably, despite calling for regulations, Shanmugaratnam warned that with the advent of regulations, the sector, which he believes to be inherently speculative and slightly crazy, would get legitimized. Nonetheless, he supported the regulation for the industry to cover loopholes that bad actors could exploit to promote money laundering.
He also said:
Some things are very clear: whether it’s crypto or traditional finance, you’ve got to regulate for things like money laundering.
Interestingly, the recent growth of cryptocurrencies and digital assets has found a significant place amid the discussions at the Davos summit, with delegates challenged to lead the industry’s regulation.
In the summit, the vice prime minister of Ukraine opined that he wishes to see the nation become the best jurisdiction for the crypto asset and plans to receive his salary in the country’s central bank digital currency (CBDC), i.e., E-Hryvnia.
Crypto regulation has been a much-highlighted topic in recent times. Regulators from across the globe have highlighted the necessity of efficient and clear regulation for the sector. A few days back, Caroline Pham, Commissioner of the Commodity Futures Trading Commission (CFTC), called on the regulators to provide clear guidance on crypto assets this year.