Regulation in the Blockchain Space: Navigating the Global Landscape l KBW2024

[Music] thank you thank you thanks for everyone it's a pleasure to have you have be here as well and I know I'm standing between you and lunch um so I'll probably keep this brief to 15 minutes or so but thank you for making the time so by way of introduction also my name is Robert Mcdonald I'm the clo and CCO at bibit and also in younger years there as well but um I wanted to talk today a little bit about regulation particularly in the blockchain space and cryptocurrency and so I bring to that about 18 years experience about 13 years in the trafi environment with a large Global Banks and about five or six years uh in fintech and crypto uh as well and obviously over that time both working in in Korea and working internationally I've met with a number of uh Regulators to talk about regulatory change and how they can help Foster a collaborative environment so over the next few minutes or so we'll cover a couple of areas to understand the need for regulation um understanding the current Global regulatory landscape and how can we have that balance between evolving and fostering uh Innovation but also trying to meet the needs of the regulator and finally the impact on Innovation and adoption uh as well so I think obviously I'm preaching to the converted that everybody in this room knows that blockchain technology has been a game changer it's not only changed in terms of financial services the way way we share information um also How We Do Supply Chain management but also how we think about ownership such as nfts and obviously with that change um has come a regulatory challenge as well uh for Regulators obviously most Regulators think uh within their own country but blockchain as we all know is basically Global in nature so as we talk about transcending borders with blockchain as we just talked about there having too much regulation can actually stifle Innovation and hinder widespread adoption so obiously companies like my own and companies like yours obiously seeking to get that balance right in terms of the complexity of um technology get that balance with compliance but also trying to satisfy Regulators as well so what I do is I spend the next few minutes going through a couple of the major um changes or major challenges that we're seeing around the world so starting with the US and the us actually has taken a fragmented approach to regulation and blockchain and cryptocurrency trading uh some states like Wyoming are embracing it and very collaborative other states are taking a very severe and strict approach um regulatory bodies like the SEC and cfdc um are trying to find that balance and I think all of us are probably aware of a few High high-profile lawsuits uh as well so I think the challenge to the US is how can they get a harmonized approach across the 50 odd states that they have as well um second step forward a little bit is the European Union um they're probably one more step in my view Advanced from from the USU in terms that they have the uh markets in crypto asset regulation uh coming in later this year where for the first time across the whole of Europe and a member states there'll be one a harmonized view in terms of how to treat crypto assets this is a fantastic approach and actually one which will be an interes in implementation at a local country level but also poses its challenges um in terms of how do you comply with local regulation as well and local compliance needs uh China I think most of us probably know they've taken a stringent approach on cryptocurrency and blockchain with a lot of the initiatives around uh blockchain technology or certain projects being um backed by the state or backed by the government going to the other side of the world before we come back to Korea um specifically to Latin America and El Salvador um El Salvador has taken a really bold approach to recognize Bitcoin as a legal tender within the within the country so which there is a fantastic willingness to embrace new technologies but also comes at a risk that with regulation being unclear how do they treat that in the country or how do other Emerging Markets treat that and then finally to our host here in South Korea uh for many years now I think he been recognized that South Korea has been at the Forefront of adoption change and Technology as well so it's no surprise a number of years ago here in Korea um the government passed some regulation specifically for virtual asset service providers uh and for Consumer Protection um that conversation has been ongoing in Korea which is fantastic and actually there's a need now to get that balance right between helping uh with compliance small mediumsized Enterprises but the question is is how do we do that in the right way so as as a question poses at the top there how can regulations evolve uh to Foster an environment where Innovation thrives but doesn't compromise safety or compliance so as I pulled these eight points together there are just points off the top of my head I'm sure other people have similar ideas so the first one is collaboration with industry stakeholders as well so coming from a Trad fire space this has been something that's been around around for years um so when I used to work in London there's a lot of um trade forums industry working groups where you would sit down with the banks and you would sit down with The Regulators to share ideas talk about new guidelines talk about new regulations what did the regulator want to see what could the banks realistically do but I think in the blockchain space and in the cryptocurrency space this is something that's lacking and something which we ought to think about linked into that is uh the guid doing the splits around flexibility uh and a flexibility in the framework so we've seen in the um tradire space that the regulation has been around for a number of years I I've worked for major Global banks that have been around for about 150 160 years that that's taken that long to get the regulations right cryptocurrency blockchain probably five six years 10 years maximum and so I think the challenge for us in the industry but also for Regulators is how do we regulate but how do you it in a flexible way that that recognizes major exchanges like my own all the way down to fintech to startups as well one of those great Innovations is the sandbox environment and I first came across this when I used to work for an e-commerce company in South Korea and actually this is a great way for the regulator and for the industry to work together uh in that it's a way for the regulated to get comfortable with the products and actually you can literally play play in the sand and and actually try out new technologies new products and um I've seen this not only in South Korea obviously in Europe and also I believe uh Mas in Singapore also likes a Sandbox environment uh as well uh lastly on this half of the slide we we need a clear guidelines uh as well I mean whatever comes out from a regulator or industry body needs to be really clear I'm fortunate that I've got a team of about 80 people underneath me mainly lawyers and compliance officers whose full-time job it is is to sit down and read regulation most people don't have that and actually so what whatever comes out needs to be clear and could be interpreted all the way from major exchanges all the way down to startups or people working individually on a project as well going over to the far side is around consumer education and and awareness and I think all of us in this room including regulators and bodies have a part to play um in this in terms of we've heard a lot of negative press particularly around cryptocurrency and I think there's a view still portrayed by some Regulators that there it has the wrong connotation I think to get Mass adoption and to get people to thrive in Innovation you need to BR PR people into that so events like this or for Road shows or for working groups is a great way to do that and then probably the next uh the next one is is a is a classic kind of compliance phrase around risk-based approach and actually this is a point where um where where Regulators can can help us with understanding the right balance of what they want as well and us as an industry can help with that and then penultimately is a need for Innovation around Financial products and uh this is again something that's been in the Trad space uh for a number of years where um A banks will sit down with Regulators again through industry forums and and talk about new products um the regulator will be quite honest and and and ask we want to regulate them how do we do that and and the bank will then basically say we can't do this but we can do this and I think that's something that's lacking in the blockchain space and cryptocurrency space in that interaction between exchanges projects and Regulators as well and I think that's a great way for um Regulators to understand more about the products and the environment that they're trying to regulate and then finally on this slide is probably the hardest one of all uh in terms of international uh cooperation so we talked a little bit a minute ago about the various countries or various uh regions in terms of what they're doing but actually how do we get all those countries or regions uh to come together and work together so I think events like this or events like token 2049 in a couple weeks time are a great way to get to meet people not only in the industry but great way to meet Regulators uh and lawmakers as well or lawyers and talk to them form industry working groups and learn about best practice as well so I think the rest of this you guys will hopefully agree with me but actually by implementing these strategies uh Regulators can actually help us help us as an industry to kind of nurture and grow and set the right environment for Innovation and change as well so as a as a key takeaway we need to think about the diverse regulatory approaches but actually not stifle the change and actually I think again South Korea has been leading way in this in terms of collaboration between regulators and entrepreneurs as well and understanding in the need for regulation um and and I think all of us would agree that actually as we said at the very beginning blockchain transcends borders but actually if a regulator gets that wrong it can actually stifle Innovation and set the industry back for a number of years then basically in in conclusion I think we stand an important Point important Crossroads not just between me and and your lunch but actually between regulation and and actually how we put that forward in terms of innovation and growth so really what I wanted to leave you with was a couple of thoughts around sharing bre best practice sharing your ideas but actually as you go around events like this get to meet people think of ways that you can collaborate together how can you work with uh Regulators or industry bodies in your local country and actually how can you form a group to work with work going forward I think it's an important time uh for us as an industry to recognize that and I just want that's a one final thought that I wanted to leave with you so again thank you very much for listening and thank you for your time thank [Music] you thank you so much for your speech I believe regulatory issues