World Economic Forum Proposes New Regulations In Place of Cryptocurrency Ban
The World Economic Forum has stressed the need for clearer and constructive crypto regulations for the greater good of the eco-space. In its current report on crypto regulations, the organization emphasized that to have an able environment for the sustainability and growth of the sector, clear and adaptive regulations. The WEF added that this would foster competition in the industry and allow businesses to realize the importance of cryptocurrencies.
The body stated the need for better crypto regulations is imminent, citing that the current laws lack critical features to sustain the “sovereign monetary regime.” According to the body, these regulations lack what it takes to address issues, such as money laundering, data privacy, licensing requirements, etc. WEF added that banning cryptocurrencies would not solve the current problems. Instead, it would limit the regulatory bodies from monitoring market activities properly.
WEF Outlines Solutions to Address Issues
The WEF suggests that the appropriate bodies should collaborate to address the rising concerns. The organization proposes the application of the existing framework in major financial institutions like the Bank for International Settlements in the crypto space, like that used in Singapore, where businesses are properly regulated. The body, however, said the framework isn’t without loopholes.
SEC’s Hester Peirce agrees that the current crypto regulations lacked clarity and proper definition of some terms. The “Crypto mum” in a recent interview, spoke about how rigid regulations are driving innovations out of the U.S. She added that employing a conservatory “jurisdictional” approach might not be proper for the DeFi space because it could further lead to a loss in liquidation and increased volatility, citing China’s mining clampdown as a perfect example. China’s ban on mining succeeded in driving out most miners to other countries.
Under-regulations Still Pose Risks
While there’s a widespread call to amend crypto regulations, there are risks associated with under-regulations. Fraud, money laundering, incurred losses are amongst the few things that could arise. However, it’s worth knowing that illegal crypto activities account for just 0.34%. The percentage is significantly lower than that traditional monetary systems pose.
Still, collaborating with international bodies to foster development and innovation, as suggested by the WEF, should be considered. Appropriate sectors should merge forces to bring up effective solutions to regulate crypto activities. The forum advocates a model similar to the one used in Singapore to make the digital space competitive with minimal risk of investing.
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