​WEF releases recommendations on the global regulation of cryptocurrencies

What’s new? Representatives of the World Economic Forum (WEF) shared their vision for regulating the cryptocurrency market. The guide, titled “Pathways to Crypto-Asset Regulation: A Global Approach,” contains key findings and recommendations from experts, as well as ways to create a responsible cryptocurrency ecosystem on a global scale. The WEF noted the difficulty of coordinating regulatory frameworks across jurisdictions but noted that it is necessary given the unique characteristics of the underlying cryptocurrency technology and the limitless opportunities it offers.

The full version of the document

What does the report say? A global approach is needed to maximize the benefits of the technology and manage the risks arising from regulatory arbitrage and interconnectedness in the crypto asset ecosystem, as well as the potential impact on traditional financial systems (TradFi).

The experts added that activities related to digital assets may not be regulated in all cases along the lines of TradFi products. The authors of the report singled out crypto mixers, standalone wallets, and decentralized exchanges (DEXs), which provide anonymity to users, as a separate problem in developing regulatory rules. In the case of the potential negative impact on TradFi, the WEF cited a number of bankruptcies of major crypto companies that occurred in the second half of 2022.

The WEF sees merit in focusing on the important role of international organizations and national/regional regulators, as well as industry participants, in ensuring responsible regulatory evolution. This requires agreeing on common policies and standards for the classification and taxation of crypto assets and activities, as well as encouraging organization registration and data sharing.

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In May, the EU Council unanimously approved the Markets in Crypto Assets (MiCA) law, which will be fully implemented across the bloc by 2025. The document will require companies to obtain licenses and stablecoin issuers will also have to have reserves equal to the volume of issued coins.

Earlier, the G7 countries called for strengthening control over crypto transactions of individuals to combat money laundering and terrorist financing.