Cypher
Cryptocurrency RegulationCryptocurrency TrendsNews

WEF Releases White Paper Acknowledges Urgency of Regulating Crypto Assets

In a recently published white paper, the World Economic Forum (WEF) has urged regulators, international organizations, and the crypto industry to harmonize legislation efforts. The publication acknowledges the essence of various stakeholders cooperating for the common good of nurturing the crypto industry. 

WEF Considers Crypto Regulation as Urgent to Eliminate Ambiguity

The publication conveys a global approach to various pathways to crypto regulation as a joint project facilitated by the Digital Currency Governance Consortium. The white paper considers crypto regulation as urgent to eliminate ambiguity. 

WEF considers global coordination essential to avoid inconsistent enforcement and regulatory arbitration. The authors outlined that crypto asset regulation is confronting several challenges. The paper alleges that the presumption of replicating regulation and activity hamper the process.

Cypher

Crypto Assets Ecosystem Unable to Fit Squarely into Regulation

The paper demonstrates that the crypto assets ecosystem has constituent elements unable to fit squarely into the current regulation. Consequently, not all cryptos fit perfectly into the activity-based and intermediary-oriented regulation approaches. Such a challenge exists even if crypto-asset activities replicate products in the conventional financial sector. 

The May 2023 white paper details that anonymity demonstrated by crypto mixers, decentralized exchanges, and self-hosted wallets increase the complexity of the regulation process. Also, the regulation is becoming challenging, considering that potential interconnectedness between crypto and traditional finance would aggravate the contagion risks.

Recently, the crypto industry exhibited contagion risks following the sudden implosion of FTX in November. It plunged the entire crypto industry into turmoil and prolonged winter characterized by widespread bankruptcy. 

📰 Also read:  Stacks Experience 13% Uptrend, As Market Maintains Bullish Trend

WEF Publication Identifies Several Classifications for Approaches in Regulatory Framework

The WEF publication formulated several classifications comparing various regulatory frameworks. Firstly, it considers the outcome-based approach that prioritizes the same risk classification to accomplish similar results. Also, risk-based regulation is an approach where the intervention is influenced relative to the risk in each activity.  

The paper considers agile regulation as one integrating responsive and iterative approaches. This approach acknowledges that policy and regulatory development is not solely a government role. Instead, it prominently becomes a multistakeholder effort.

Adopting the agile regulation would involve applying regulatory sandboxes, no-objection letters, and guidance by regulators. The paper cites Switzerland’s Financial Market Supervisory Authority as an illustration of an agile regulator. Switzerland features alongside Japan as a jurisdiction deploying the self-and-co-regulation approaches.

Regulation by Enforcement Criticized as Unviable

The paper identifies the United States as the lone jurisdiction where the regulators are deploying regulation by enforcement. The publication rules out the US enforcement approach to formulate a framework as unviable. The approach excludes the opportunity to have any meaningful discussion on what to regulate. 

The WEF paper issues three broad suggestions to regulators, the crypto industry, and internal organizations. However, it emphasized the adoption of best practices would be attainable through sharing and coordination. 

📰 Also read:  US Enacts New AI Safeguards in Government Operations

The paper urged collaboration among policymakers and industry stakeholders drawn from various jurisdictions to guarantee consistency and clarity. The WEF petitions regulators and governments to embrace transparency starting position to overcome cross-border concerns.

The WEF publication constitutes the foundational paper to establish the Blockchain and Digital Assets team oriented towards evaluating outcomes in various regional approaches to regulation. WEF believes in the coordinated efforts of establishing public-private coordination to have meaningful discussions and first-hand learnings on the unintended consequence of various regulatory frameworks. 

Editorial credit: rafapress / Shutterstock.com


Tokenhell produces content exposure for over 5,000 crypto companies and you can be one of them too! Contact at info@tokenhell.com if you have any questions. Cryptocurrencies are highly volatile, conduct your own research before making any investment decisions. Some of the posts on this website are guest posts or paid posts that are not written by Tokenhell authors (namely Crypto Cable , Sponsored Articles and Press Release content) and the views expressed in these types of posts do not reflect the views of this website. Tokenhell is not responsible for the content, accuracy, quality, advertising, products or any other content or banners (ad space) posted on the site. Read full terms and conditions / disclaimer.

📰 Also read:  Coinbase Analyst Claims AI Tokens Get More Hype Than Deserved

Cypher

Stephen Causby

Stephen Causby is an experienced crypto journalist who writes for Tokenhell. He is passionate for coverage in crypto news, blockchain, DeFi, and NFT.

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button
Close
Skip to content