Limitless cryptoma markets show the need for global rules

More than 500 years passed between the foundation of the first bank in the world, Monte dei Paschi di Siena, and the creation of the first global banking standards: the Basel Agreement of 1988.

According to this scale, global decision -makers in the development of standards for cryptocurrencies, which only appeared 13 years ago with Bitcoin's debut in January 2009, ahead. Forums such as the Basel Committee for Banking Supervision, the Financial Stability Board and the IOSCO securities supervisory authority are already discussing global standards for crypto.

But this year has given these conversations a new urgency, since the explosive growth of the cryptoma markets, paired with their increasing connections to the regulated sector and the widespread acceptance of the currencies by individuals that FSB has caused to warn that stability risks could "escalate quickly". .

"Everything that grows and is not regulated can cause enormous problems if we don't get it under control," warned Mairead McGuinness, EU Commissioner for Financial Services, at an FT event on February 17. She described how young people are now to be invested as a "pastime" in crypto and to be financially advised by the video sharing platform Tiktok.

Everything that grows and is not regulated can cause enormous problems if we don't get it under control

"The collective activities are alarming if they are not regulated, and therefore there is a global need for principles in the entire cryptor room," she emphasized.

The limitless nature of cryptocurrency trading companies, whose decentralized businesses can be scattered across physical areas and servers, underlines the need for a global approach for their surveillance.

"There are cryptocurrency companies that seem to be everywhere and yet are nowhere physically," said Mark Steward, head of the enforcement and market supervision at the British Financial Conduct Authority, at the same event on February 17. "This is a real warning signal for everyone and it is something that the supervisory authorities all over the world should worry."

Ashley Alder - Head of Securities & Futures Commission in Hong Kong and chair of the global securities regulatory authority IOSCO - halfway from the FCA, the coordination between the various national and international regulatory authorities sees "most important". He says he wants to "examine a holistic and integrated approach for virtual asset activities and reduce the regulatory arbitrage", i.e. any variation of the rules between the areas.

While political decision -makers in the large financial centers agree on the need for global standards, Benoît Coeuré, the then head of the Bank innovation center for international payment compensation, warned in December before the risk that the jurisdictions will "take other ways and create a system, the global is inconsistent".

The EU has already presented its proposed regional principles in the markets in Crypto Asset (Mica) Directive. This was presented to the European Parliament in October 2020 and is expected to come into force around 2024 - it includes everything from the custody of digital assets to the sale and trade with you, the offer from advice to the exchange for hard currency.

Meanwhile, Alder in Hong Kong says that his authority is "pragmatically and creatively using its existing powers" so that she can regulate crypto as she would regulate other securities. Or, as he puts it: "On the basis of a 'same business, equal risks, equal rules' approach."

More formal rules come. Hong Kong now develops laws that ensure that all crypto-assets are recorded by the same regulation, "regardless of whether crypto-assets that are traded on these platforms fall under the traditional definition of 'securities'".

The neighboring China chose an absolute approach. In September, the authorities declared all crypto activities for "illegal" and promised to investigate Chinese citizens who work for foreign crypto exchanges.

Instead,

Singapore has added crypto to his anti-money laundering regime. According to a spokesman for the Monetary Authority of Singapore, the regulatory authorities are "ready to adapt our rules as needed in order to protect the political balance between the support of innovations and the management of risks".

In the USA, the chairman of the Securities & Exchange Commission, Gary Gensler, has pushed for the congress of his agency - and others, such as the Commodity Futures Trading Commission - grant "a more robust supervision and better investor protection" in the large parts of the crypto that "sit on the regulatory framework". He warned that they are "full of fraud, fraud and abuse".

The CFTC also warned of the dangers of "regulation by enforcement" and asked the congress to set up clearer rules for what is and what is not.

In Great Britain, the FCA has started to register cryptocurrency companies to comply with anti-money laundering rules and warn of a hard procedure for advertising as soon as crypto is included in the FCA financial development system. "More comprehensive legal provisions are required here," said Steward at the recent FT event.

In addition to these national regulatory measures, all large areas indicate that they keep an eye on global developments and participate in international discussions. An official points out that the EU's Mica Directive was designed to implement international recommendations where they exist, including the work that the FSB had done in connection with stable coins-a kind of cryptocurrency whose value is covered by real assets such as traditional currencies, gold or short.

However, this does not mean that there are no differences in regulatory treatment - even between systems with a common goal of protecting consumers and protecting financial stability. For this reason, crypto control has now been shot to the FSB agenda.

Klaas Knot, chairman of the FSB, says: "Of course, the FSB would be able to take this lead. We have the convenient power.

Knot expects that the work of the FSB on global crypto standards could "get quite far in 2022". The next step would be to publish these standards and their rapid implementation by the 24 member countries of the FSB - and others beyond.

Everyone hopes that quick action can ensure that the fate of crypto is less shameful than that of Monte dei Paschi: once famous as the oldest bank in the world, today best known as the institution that was most likely to be exposed to collapse due to the financial crisis of the euro zone.