Competition or Collaboration? Finding the Right Balance in Global Regulation

- Panelists call for more multilateral regulatory conversations

- “Nothing is an impossibility... it’s just a possibility you haven’t considered yet.”

- The industry needs to involve a broader set of participants than it currently does to resolve issues around property law, for example

Finding the right balance between competition and collaboration is a tightrope that all jurisdictions need to walk, as the lack of interoperability between local regulations causes friction for the digital asset markets.

The panel, hosted by Dr. Joachim Schwerin, Principal Economist in the unit responsible for the Digital Transformation of Industry within the Directorate-General Internal Market, Industry, Entrepreneurship and SMEs (DG GROW) of the European Commission, explored opportunities for increased collaboration and interoperability between regulators globally, focusing on creating corridors between key jurisdictions.

Deepa Raja Carbon, Managing Director and Vice Chairperson, Dubai Virtual Assets Regulatory Authority, talked about Dubai’s approach to regulation in which it prioritizes innovation and allows the industry to grow and service people.

“Nothing is an impossibility for us. It’s just a possibility you haven’t yet considered. We’re very motivated and tend to be driven by the pace that is set by that leadership,” she said.

She said that Dubai has had extremely collaborative dialog with Asian jurisdictions, such as Japan, Hong Kong and Singapore, which have conducted strong digital asset pilots. “These corridor conversations are a lot easier because there are only two jurisdictions. Multilateral discussions, obviously, are a lot more complicated,” she added.

Moad Fahmi, Chief Fintech Officer, Bermuda Monetary Authority, believes that more regulators are beginning to speak the same language around protecting consumers, preventing financial crime, and maintaining financial stability. “We have this common language now as to how we think about innovation in regulation,” he said, citing the Global Financial Innovation Network of 80 regulators, which runs a global sandbox.

The panel also discussed the important difference between harmonization and interoperability; the differing legislation between crypto currencies and security tokens; and exploring blockchain use cases beyond financial services.

Fernando Vázquez Cao, CEO of SBI Digital Asset Holdings, raised the question as to whether the right stakeholders were in the room to discuss all the implications of using DLT in and beyond finance.

“I think the answer is no,” he said. “One of the niches we have in Japan when it comes to tokenization is whether holding a token is enough to prove that you own that token. In this sense, we are talking about property law and need to engage with non-financial regulators, for example. We now have a much broader scope which is an unexpected turn when we started on this journey,” he said.

Alex Kim, Founder and CEO of Upbit APAC Pte, believes that the digital asset sector has enough capital, talent and more than enough governmental attention, but imagination is lacking.

“What we want to do is urge the private sector and the regulator to have a more open minded conceptual dialog,” he said. “Have more curiosity, even though you’re unsure, uncomfortable, try to understand it and encourage sectors to collaborate. But let’s not close the door to anything, because every new innovation starts from very funky looking things.”