If you read mainstream media, you’d be forgiven for thinking that cryptocurrencies represent the ‘wild west’ of finance: a lawless landscape where anything goes. Yet despite the headlines, there is a huge amount of work underway around the world to develop innovative legal frameworks to support decentralised finance, making it more secure, stable and safe for individuals and businesses.
After working in the banking sector, Dorian Ravaute has returned to his academic background and is writing a thesis that he started four years ago on legal frameworks in blockchain technologies. He is in a perfect position to shed some light on how the industry is maturing…
Why is regulation a good thing?
Cryptocurrencies and decentralised finance still retain their bad reputation and we hear a lot about fraudulent activity, instability and volatility. Yet blockchain is a revolutionary technology that can make financial products more accessible. By developing a legal framework, we can help to build trust in decentralised finance — something which is vital if blockchain technology is going to be integrated into the everyday lives of individuals and society.
What regulation already exists?
Different countries are at different stages and some are more advanced than others. The US state of Delaware passed the first piece of regulation in 2017: the ‘blockchain bill’ allowed companies to use blockchain to issue and track shares. Meanwhile in Europe, Estonia and France have driving efforts to promote the ethical use of blockchain technologies with regulation to prevent decentralised finance being used to launder money and fund terrorism.
More recently, national banks have been embracing blockchain technology. Earlier this year, El Salvador adopted bitcoin as a legal tender and China began piloting the electronic yuan.
By 2023, the industry should be regulated across Europe by the MiCa (Market in Crypto Assets)↗ regulation which aims to produce a standard within which all businesses across Europe will be able to operate.
What are the challenges?
Blockchain is technically complex. Regulators don’t just have to understand the financial and economic implications, but also the underlying technology. And because it’s a new technology, there hasn’t been much time for people to develop and spread their expertise.
On top of that, there is always the challenge of balance. The regulation must be strong enough to prevent fraudulent business while allowing freedom for innovation.
What interests you most about DeFi?
It has to be the way it democratises finance. With decentralisation, the ‘middle-man’ disappears and people can invest directly in a range of projects that would have previously been out of their reach.
What steps are CryptoSimple taking to become regulated?
Trust and security are vital to us. We’re currently undergoing regulatory registration as a Digital Asset Service Provider (DASP)↗ by the French Financial Markets Authority (AMF)↗ which will support us to launch and operate across the majority of the European Union.
Beyond that, we will soon start working with Bafin in Germany↗ , FCA↗ in the United Kingdom, and SEC↗ in the United States. In the meantime, you can sign up to our waitlist and we’ll let you know as soon as we are available in your country.