The topic of regulation has been kicked around in crypto circles for what seems ages. Some, think it’s essential in order to have a more trustworthy environment where business knows where it stands and governments are more comfortable with a blockchain world they don’t yet fully understand. Others hold that regulation is the antithesis of what was imagined when the first freshly minted bitcoin ventured out into the bright new dawn of decentralisation.
Regulation doesn’t happen quickly in that it is always reactionary to new developments. Blockchain technology is moving lightning fast and governments and their regulators are having a real problem keeping up with this one. Complexity is high and your typical regulators just don’t have the expertise to assimilate what has happened so far, much less know where it is going.
Also, you have your distinct jurisdictions across the world where culturally different ideas of how to deal with regulation are at play. Macro influencers such as the US and China are handling things very differently albeit with a similar underlying need to keep control. Having said that both regions are extremely aware of the innovation that blockchain and cryptocurrency brings to trade and are furiously working out how to gain the measure of control that each needs through regulation.
On the other side of the coin there are certain countries who are extremely forward thinking and who are making themselves a crypto/blockchain friendly place for businesses to set up shop there. Obviously, they still need to have the highest regulatory framework and standards in place in order for businesses to operate there and which will then allow them to move on to other jurisdictions which will recognise the thorough compliance these businesses would already have.
It can certainly be argued that Switzerland, Gibraltar and Malta are very much ‘blockchain friendly’ countries. A further advantage these countries have is that being quite small in comparison with the slow, lumbering jurisdictions such as the US and their SEC and CFTC regulators, they are able to pivot and adapt to regulatory changes with far more ease.
Regulatory compliance is obviously of huge importance across the whole of the blockchain and cryptocurrency industry, however, it has the biggest repercussions within the fledgling blockchain finance sector and companies wishing to become effective here absolutely must seek the fullest and most stringent compliance.
One blockchain finance company that is already a long way along the arduous and exacting path of regulatory compliance is Lendingblock, a cross-chain professional trading exchange that specialises in crypto to crypto loans and focuses on bringing the securities lending model to the digital asset economy. Given that Lendingblock is targeting large hedge funds and institutional investors it has sought to regulate itself since day 1.
Lendingblock is registered in Gibraltar (given the aforementioned forward thinking of the ex-British colony) and is at present well down the route to receiving a DLT (Distributed Ledger Technology) license from the GFSC (Gibraltar Financial Services Commission), the first step on to compliance in other regulatory jurisdictions such as the UK and the US.
Large institutions need to know that the company they are dealing with has been under the most intensive scrutiny from regulators and given that Lendingblock is looking to provide loans of between $ 100,000 and $ 5,000,000 this company needs to have complied with the toughest and most rigorous regulations.
Notwithstanding the example of Lendingblock there are still many, many blockchain companies out there who have adopted a ‘wait and see’ strategy as far as regulation goes – a risky strategy given that the SEC is looking to wield ‘enforcement’ on any business adjudged to be lacking in its regulatory commitments.
On a global scale the IMF is making an attempt to bring some kind of consensus across the disparate jurisdictions. It would hope to promote ‘best practises’ globally that all jurisdictions would at least incorporate into their own regulatory frameworks.
When it comes down to it all regulatory jurisdictions are going to have to go back to the drawing board and draft new legislation — it’s no good trying to impose old laws on a cutting edge new technology. Also, regulators must be ready to pivot in very short amounts of time as even newer tech and innovation comes into the blockchain arena.
Given the investment and interest engendered by the blockchain and crypto industry, tighter and stricter regulation must surely be just around the corner. Which companies are going to await regulatory developments and which companies (as in the case of Lendingblock) are going to force the issue and spend the time and commitment to get ahead of the herd and be the first fully regulated entities in a new frontier ripe with opportunities. Time will tell.