During the past year, the crypto asset industry has witnessed spectacular highs - overshadowed by lower lows, including crypto firm failures, fraud, scams and mismanagement of customer funds.
While it is no fault of the underlying crypto assets or blockchain technology, it once again highlights the need for robust regulatory policy and supervision, set on a global level.
Global standard-setters, including the Financial Stability Board, Basel Committee on Banking Supervision and Financial Action Task Force continue their efforts to set the right expectations for the market.
The European Union is at advanced stages of finalising the new Markets in Crypto-Assets Regulation. In the United Arab Emirates, Dubai authorities are setting up the world’s first authority solely focussing on virtual assets.
In the UK, the Government intends to make cryptoassets a regulated financial instrument. In the United States there has been progress to advance legislation on digital assets, but timing of such legislation continues to be in question.
This PwC Crypto Regulation 2023 report details the ongoing regulatory developments in over 25 jurisdictions.
The report shows that many regulators across the globe have either enacted regulatory schemes for dealing in digital assets or are on the brink of doing so. And given the recent events in the sector, the speed of these developments is likely to intensify.
For traditional financial institutions, digital assets regulation gives the long needed clarity and certainty to enter the space and start building their digital assets offerings. For crypto native firms, regulatory clarity may mean having to quickly expand their regulatory expertise and compliance oversight, in line with global financial services regulatory requirements.
Trust in the space may be broken right now. While regulation alone cannot solve that, clarity across terminology and application of regulation, along with firms’ enhancements to their risk management capabilities and procedures, is a good starting point.
As recent events have shown, there is a need for sensible, consistent regulation of crypto markets around the world. The sooner that we get such regulations the safer these markets can be, and the sooner they can flourish.
Dr. Michael Huertas
Financial Services Leader, Global Legal Business Solutions Network, PwC Germany