Several global central banks and regulators have utilized the ongoing World Economic Forum (WEF) summit in Davos to call for the urgent rollout of basic regulations targeting cryptocurrencies like Bitcoin (BTC).
According to bankers at the summit, the evolving nature of the cryptocurrency sector and the speculative nature of digital assets means that regulators need to step in and enact the necessary laws, Bloomberg reported on January 18.
The group led by Singapore’s Senior Minister Tharman Shanmugaratnam, European Central Bank Governing Council member Francois Villeroy de Galhau, and UBS Group AG Chairman Colm Kelleher, agreed that recent events in the crypto market call for regulations.
According to Villeroy de Galhau, incidents such as the FTX collapse and the performance of money market funds can be linked to what he referred to as non-banks.
“The greatest challenge today is non-banks. All of them have one common feature — they are all linked with non-banks. And here, we lag behind. It’s more difficult because it’s a very evolving landscape. We should rush to some urgent non-bank regulation starting with cryptos,” he said.
Enacting basic laws
Elsewhere, Kelleher suggested assets in the crypto space should be able to meet the ‘basic hurdle’ of anti-money laundering. In this case, he noted that due to the inability of most cryptocurrency products to meet clear anti-money laundering checks, companies in the space ‘cannot justify selling that product as it’s currently constituted.’
Additionally, Kelleher expressed his bullish stance regarding blockchain technology, stating it’s ‘unstoppable’ while acknowledging there might be interest from UBS clients to explore crypto products.
“We are looking for a regulatory framework that will allow us to accommodate that for our clients,” he said.
Dangers of regulating crypto
Interestingly, despite calling for laws, Shanmugaratnam warned that enacting regulation might legitimize a sector he terms is ‘inherently speculative’ and ‘slightly crazy.’ However, he rooted for regulating the industry to seal loopholes that can be leveraged for vices such as money laundering.
“Some things are very clear: whether it’s crypto or traditional finance, you’ve got to regulate for things like money laundering,” he said.
Notably, the recent growth of cryptocurrency has found a spot in discussions during the Davos summit, with delegates challenged to spearhead the industry’s regulation.