Major economies around the world should coordinate efforts to create global crypto regulations, said Jeremy Allaire during his interview with Reuters.
The CEO of Circle, a cryptocurrency startup backed by Goldman Sachs and valued at $3 billion, highlighted an apparent lack of regulations across the world in the face of booming crypto adoption. The entrepreneur recognized that fintech startups are working in the gray areas of law, which leaves billions of dollars worth of investments into the blockchain space unprotected and ungoverned.
“Ultimately there needs to be normalization at the G20 level of critical crypto-related regulatory matters,” said Allaire.
Innovation Outpacing Regulation
The comments come at a time when global regulators are sometimes finding themselves unable to keep up with the pace of fintech innovation. Their legal frameworks are too old to fit in assets that are intrinsically multifaceted. The US Securities and Exchange Commission, for instance, continues to treat cryptocurrencies as securities by citing a 72-year old security law. India, meanwhile, has spent two years looking for a perfect definition to explain bitcoin and similar assets, eventually taking measures that appear rushed than logical.
Some regulators, yet, are willing enough to take the first lead.
The Paris-based Financial Action Task Force (FATF) in its report last Friday cleared that it would introduce the first set of rules for crypto criminals by mid-2019. The global AML watchdog stressed that jurisdictions worldwide would have to license or regulate crypto exchanges to curb money laundering and terrorist financing.
Allaire on ICOs
Circle CEO Jeremy Allaire |Source: World Economic Forum/YouTube
Allaire said that he supports the initiative taken by the FATF, but a first global regulatory draft for cryptos should also elaborate its take on initial coin offerings (or ICOs).
So far, a large number of ICO rounds have turned out to be vaporware, failures, or pure Ponzi scams. It has led to many national regulators, like South Korea, developing a contrary understanding of tokenized fundings.
Allaire said that new global regulations should define the legality and illegality of issuing tokens by a private company, as well as how exchanges handle market manipulations and KYC.
“When it comes to token offerings, how should they be treated? Which token offerings are securities, which are not?” he said. “The trading venues – are they like spot commodity markets that need to have rules in place around market manipulation?”
So far, Switzerland and Japan are among the only leading economies that have shown interest in regulating the crypto space in line with the pace of its innovation. At the same time, the world’s second-largest economy — China, also a member of the FATF — has banned large swaths of it outright.
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