Governments worldwide are grappling with the prospect of regulating blockchain and crypto asset technologies. However, regulators face a tricky balancing act as they aim to protect consumers from unscrupulous players while still allowing people to benefit from these technologies’ exciting benefits.
This was the main point of discussion at the recent panel discussion focusing on the current state of blockchain and crypto-asset regulations, held at the Democracy4All summit in Barcelona. The panel was chaired by Giannis Rousopoulous, Policy Advisor and Research Fellow at the Hellenic Parliament, and featured:
- Luiza Castro – Head of Legal Department and Crypto/Web3 Specialist at KillB
- Saeed Mohammed Ali Alhebsi – Advisor in AI and Senior Project Manager at the UAE’s Ministry of Human Resource and Emiratisation
- Joaquim Matinero – Banking-Finance and Blockchain Associate at Roca Junyent
Bad actors and bad exchanges
The initial part of the discussion focused on the high-profile collapse of FTX and how it will impact regulation going forward. Castro noted that the controversy and apparent fraud surrounding FTX have created a lot of ‘insecurity’ in the industry.
‘This is an environment that we don’t need right now. I think this will give more power to regulators and act as a ‘live example’ as to why the whole ecosystem has to be regulated. Even though this is not what we want, we don’t want the ecosystem regulated (completely) end-to-end,’ she said.
‘I think we will have a lot of arguments (going forward) about why some parts of this ecosystem have to remain decentralised and deregulated, while other parts need more regulation.’
Castro said it is clear that there need to be regulations for when things go wrong and how to address issues. This was echoed by Matinero who said that consumers need to be given some assurance that their coins can’t be taken away when things go pearshaped.
‘If there is no type of protection then it is the same as going to a casino and playing on a jackpot machine. When everyone is winning in the market then everything is fine. It’s when things are falling that we have to find the middle-ground on technology and protection.’
A governmental view
As someone who is directly involved in the regulation of blockchain and crypto-assets at a regulatory level, Mohammed Ali Alhebsi said that the UAE government is very bullish about new technologies going forward.
However, unlike other countries that are still grappling with what this technology will mean for businesses and consumers, the UAE has developed a multi-decade plan to be the global leader in this space and has spent significant time and resources educating government officials and regulators about how it can be used.
He added that the government has developed several strategies to be an international leader in AI and blockchain technologies. This includes a new council and ministry aimed at attracting talent and building awareness about the technology.
‘Most of these (government departments) have this technology and this awareness and can now see the best opportunities for blockchain and AI (in their fields). Always as a government, they follow a clear strategy from the government.’
BSV Blockchain is pro-regulation
The BSV Blockchain Association is pro-regulation and believes that the global adoption of blockchain technology requires enterprises and lawmakers to become comfortable with legal compliance by industry participants.
To ensure the development of a regulatory environment that both fosters lawful conduct and facilitates innovation, the Association regularly engages with leading policymakers to advise on the development of positive policy.
In October 2022, the Association announced the launch of its Blacklist Manager, the first software tool making it possible for Bitcoin miners to comply with court orders to freeze lost or stolen Bitcoin tokens.