Regulatory Uncertainty a Recurring Theme at Londonâ€™s Token2049
Regulatory uncertainty kept coming up at Londonâ€™s Token2049 conference on Thursday.
Speaking via Zoom, Galaxy Digital CEO Mike Novogratz said U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler was smart and committed but questioned the scope of the regulatorâ€™s purview where crypto is concerned.
â€œGensler wants to be the sheriff of crypto, but he doesnâ€™t have full authority because of the newness of our industry,â€ Novogratz told the crowd in London.
Ascertaining whether crypto becomes a security when itâ€™s lent to someone is a nuanced question, the Galaxy chief said, lamenting a period of continued regulatory uncertainty. However, the crypto industry has brought some of this on itself by a lack of education, according to Novogratz.
â€œThe crypto community at large, myself included, didnâ€™t do a good enough job lobbying domestic politicians, educating them, so they really understand what theyâ€™re talking about,â€ he said.
The biggest decision is how stablecoins are approached, Novogratz added, warning against options designed to give central bankers better dashboards and describing himself as a â€œgiant alarm ringerâ€ about centralized stablecoins.
â€œA central bankâ€“issued currency, I think, quite frankly, will be a disaster,â€ Novogratz said, referring to central bank digital currencies (CBDC). â€œGovernments are not good at innovating and I donâ€™t think anyone in the West wants to give up as much privacy as the Chinese are willing to give up.â€
â€˜Going through this pain togetherâ€™
A morning panel focused on institutional crypto trading echoed the need for clarity.
Michael Moro, CEO of Genesis Trading (which shares a parent company with CoinDesk, Digital Currency Group) pointed to a cloudy regulatory climate being precipitated by U.S. financial supervisors.
â€œWhen Chairman Gensler comes out and says most of the tokens that are out there trading are a security but doesnâ€™t name which ones are the securities, thatâ€™s more regulator cloudiness,â€ said Moro.
Where the U.S. is cloudy, Europe is fragmented, added Darren Jordan, managing director of BitGo Europe. â€œWe are all going through this pain together,â€ he said.
Itâ€™s also a common misconception that crypto is unregulated and like the Wild West, said the panelists.
â€œIt feels like being a bank nowadays at times,â€ said Max Boonen, founder of crypto trading firm B2C2, and a former fixed-income trader at Goldman Sachs.
The view from those in decentralized finance (DeFi) was that education should be around how aligned smart contracts and regulation really are, according to Stani Kulechov, CEO of lending platform Aave.
â€œMy academic background is as a lawyer and Iâ€™ve always thought smart contracts have a killer use case in regtech,â€ said Kulechov. â€œThe whole ecosystem is auditable every second by anyone. You can create this amazing risk mitigation that we didnâ€™t have in 2008.â€
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