There is little doubt that blockchain and digital asset technologies will foster greater financial inclusion and economic growth—but to realize the full potential of this technology, clear regulatory frameworks are needed. So what are the current policy developments proposed in the United States and abroad?
At Ripple’s 2019 UBRI Connect, Michelle Bond, our Global Head of Government Relations, led a conversation with Kristin Smith, Director of the Blockchain Association about today’s legislative developments in the digital assets space and what we can expect as the industry continues to mature.
Current State
The entrance of Facebook’s Libra white paper fueled a global discussion around regulation for blockchain and digital asset technologies. There isn’t a single jurisdiction that isn’t paying attention to the industry today. In the U.S. alone, there have been several Senate and House hearings to evaluate the potential impact of digital asset regulation on industry growth and economic development.
Yet, as Smith discusses, “when a new transformative technology comes along, it takes time for the regulations to keep pace.” In the U.S. and abroad, it’s important for policymakers to be armed with industry knowledge to help them shape conditions that will enable technological innovation to thrive. The mission of the Blockchain Association and its members, which includes Ripple, is to be a unified voice of the blockchain industry and to educate and collaborate with policymakers to advance trust, transparency and safety of distributed technologies and services.
In conversations, policymakers express concern stemming from a lack of understanding. “But once you educate and get to the point of clarity, there is increased interest in trying to find the right public policy solutions in order to fix today’s problems,” says Smith.
Today, many governments and policymakers around the world are working together to establish regulation that does just that. Regions, including the U.K., Singapore, Switzerland and Abu Dhabi already have in place digital asset market frameworks that both support innovation and address risk. For example, the U.K. recently updated its cryptoasset guidance and under the framework the U.K. has noted that XRP is not regulated as a security. These frameworks can serve as a model for countries with less clarity that are looking to take cues on how to navigate digital asset and blockchain regulation.
Partnering Together for Clear Regulation
In the beginning stages of any new industry, it’s important to bring together the right stakeholders to support a thriving and innovative ecosystem. For the blockchain industry, collaborating to educate policymakers around the world is what will advance consumer protection initiatives, while also allowing innovation to prosper. “This is very much a technical and in the weeds type of discussion and policy. You really have to dig in and narrow in on the issues to produce thoughtful solutions,” says Smith.
It’s vital for businesses to have a sense of clarity around any proposed solutions. Policies with staying power are those that enjoy broad bipartisan support. “Having a bipartisan group of lawmakers working on legislation is the key to success for something like these issues. What we don’t want is to have solutions that maybe only Republicans want and then have a Democratic administration or vice versa remove or reverse the decision,” says Smith.
Looking Ahead to 2020
Today’s continued discussions with policymakers is encouraging for the industry, but there is still a lot of work to be done globally. Without regulatory clarity, countries, including the U.S., risk pushing innovation, tax revenues and jobs that new technologies create, overseas.
“I’m very worried and I don’t think that is an irrational or paranoid viewpoint to take. Companies, even within members of the Blockchain Association, are moving their operations overseas… because there are strong consumer protections in place and certainty in those regulatory frameworks,” says Smith.
As the industry looks ahead to 2020, it will be more important than ever to come together and realize the global impact of these technologies.