Davos 2023: Banking Panel Reinforces the Need for Crypto Regulation
A group of global banking experts hosted by the World Economic Forum (WEF) convened about the need for global crypto regulation, including stablecoins and unbacked crypto assets. The panel agreed there must be at least some kind of base regulation for these assets and bank-equivalent regulation for blockchain applications seeking to offer products similar to what traditional banking offers.
WEF Global Banking Panel Seeks More Crypto Regulation
Global bankers have agreed on the need for more clear regulations for cryptocurrencies. In a panel titled “Banking in the Eye of the Storm,” part of the Davos 2023 meetings of the World Economic Forum (WEF), directives of central and private banks examined the cryptocurrency market after the events that unfolded during 2022, including the fall of cryptocurrency exchange FTX.
François Villeroy de Galhau, governor of the Central Bank of France, explained that regulation for crypto markets was key for controlling the possible damage these might bring to investors in the future. Villeroy de Galhau stated:
The question is not whether we have to regulate or not… for sure we have to regulate. Some even say it’s not a question of regulating, is a question of prohibiting.
Villeroy de Galhau also pushed for the alliance of central banks and private banking institutions to partner in promoting innovation, including the adoption of CBDCs (central bank digital currencies).
The governor of the Central Bank of France also expects the implementation of the finalized Basel Committee rules in all jurisdictions, which were approved in December and offer directives for the exposure of banks to cryptocurrency assets.
A Base Level of Regulation
While all panelists agreed on the need for at least a minimal level of regulation, including anti-money laundering (AML) and know-your-customer (KYC) measures for all assets, Tharman Shanmugaratnam, senior minister of Singapore, stated that some assets would better be unregulated, clarifying the risks that investing in these assets might bring possible investors.
However, he clarified that any cryptocurrency and blockchain-based tech that aimed to offer comparable services to banks, including stablecoins, should be regulated in the same way traditional financial institutions are.
Shanmugaratnam believes the answer of banks to crypto and blockchain innovation should be the linkage of local domestic systems with today’s global payment systems, to help immigrants and SMEs, which are currently served by cryptocurrency alternatives.
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