Friday, September 30

TNABC: Future regulations in the world of cryptocurrencies

One of the hottest points in the world of cryptocurrencies refers to the legal framework of digital assets related to the Blockchain. Thus, the issue of future regulations in this sector could not be left out of this edition of the The North American Bitcoin Conference (TNABC). In this panel, experts of great caliber in the legal subject were found.

The forum featured Jeff Howard from OSL, Veronica McGregor from Exodus, Mary Beth Buchanan and Liat Shetret from Elliptic. This group of panelists was moderated by Andrew Hinkes, representative of the firm K&L Gates. The experience of these specialists served as a starting point for understanding the possible laws that will govern the crypto world in a few years.

It must be taken into consideration that, in the world of finance related to the Blockchain, there is no clear regulatory framework. Although in many countries there are some laws that relate to digital mining and taxes, it should be noted that other sectors remain in the dark. Among the latter, Decentralized Finance (DeFi), the thriving market for non-fungible tokens (NFT) and stablecoins stand out specifically.

What aspects of future regulations were touched on at TNABC?

The future regulations that apply in the crypto world, as was made clear in this TNABC forum, will have a great impact. It is a market that is moving from non-existent laws, to one with a legal framework that many will consider abusive and vigilant-looking on the part of nation states.

For Shetret, the appearance of regulations in the DeFi universe could have negative and positive aspects. Among the positives could be considered the cleaning of criminals from this decentralized market. This taking into account that a large part of the scammers would be protected by the lack of third parties and by anonymity within DeFis.

The panelist assures that the regulations of this type of finance must be totally different from those of the fiat sector. «It is a new reality that requires a new application of regulatory laws», he expresses. Consequently, he assures that a series of concepts, from his experience, would not be adaptable from one sector to another. «Innovation is required where necessary to bridge the gap between meeting regulatory expectations and what DeFi projects need to do».

This aspect of future regulations in the crypto world is just one of those analyzed in this TNABC forum.

During this first day of the TNABC, specialists in the area touched on important issues related to future regulations in the crypto world.  Source: CT
During this first day of the TNABC, specialists in the area touched on important issues related to future regulations in the crypto world.

Other issues touched on at the TNABC on regulatory frameworks

A relevant fact of the probable regulations is that introducing centralized laws in a decentralized movement could be incompatible. This is part of Veronica McGregor’s vision. The panelist assures that, in her experience, this can turn into something disastrous. «In my experience, we took a decentralized entity and when we moved our training platform and handed it over to token holders to change form, we ended up with a centralized company», he explained.

For her, the key question is «Who is going to regulate you and under what criteria?». In this same scenario, Jeff Howard argues that the main issue is to define what is a smart contract with which a certain protocol works to create a regulation and not apply existing regulations that are not compatible.

Precisely, the future regulations, the panelists of this TNABC forum agree, must be new and in accordance with this new form of finance. Seeing the positive side of the regulations, Mary Beth Buchanan assures that the main concern of the regulators is who is doing the KYC, who launches the tokens and who defines the loan commissions.

Meanwhile, he states, “regulators will sit at your table to make you grow in compliance» of laws related to the sector.

Stablecoins, one of the main targets of government scrutiny

Stablecoins are digital currencies, as the name implies, stable. That is, its price is anchored to that of national currencies such as the USD. They are essential for the operation of crypto trading in any of its modalities. For example, they are the basis for pairs in futures, spot and other trading. In addition, they are an integral part of Decentralized Finance.

For all their potential, the authorities would eventually see them as a great challenge to the dominance of the dollar. Therefore, explains Hinkes, they become one of the quintessential targets of government scrutiny. In consecuense, “From the Secretary of the Treasury of the administration of former President Trump, it has been warned that the regulation is underway», he expressed.

«We saw a lot of interest in stablecoins last year and we are going to see even more in 2022», points out Buchanan. Both stablecoins, such as DeFi, trading and NFTs, will be part of future regulations, said the experienced panelist at the TNABC.

For his part, he explains that the Senate and the House of Representatives are working hard to understand what these coins are about. Likewise, he explains, they are working rapidly to advance a series of laws that would limit the scope of these private currencies.

At the same time, Buchanan highlighted an aspect of great importance. It is that stablecoins are used all over the world. Therefore, even if the regulatory measures in the US reach the worst case scenario, which is the ban, these currencies will not be withdrawn from the market.