Bitcoin began as a niche curiosity with a handful of users worldwide. Thirteen years later, it has been adopted by millions, including a country. With Bitcoin trading near US$65,000 and having a market cap of over US$1 trillion, early adopters like Erik Voorhees, founder and CEO of ShapeShift, a crypto management platform, believe that Bitcoin is finally living up to its promise. 

Voorhees was joined by a handful of crypto veterans in a panel discussion on the “Future of the Global Economy” at today’s Bitcoin and Beyond Virtual Summit organized by Forkast.News and co-sponsored by AAX. The other panelists included Wayne Huang, Taiwan-based co-founder and CEO at XREX, a blockchain fintech that focuses on cross-border transactions; Jamie Khurshid, CEO and founder of Jacobi Asset Management, a digital-asset management firm, and Caroline Malcolm, senior advisor on blockchain and tax at the Organisation for Economic Co-operation and Development (OECD). The panel was moderated by Canadian investor and Blockchain Research Institute co-founder Alex Tapscott

Bitcoin may be nearing its potential but regulators still have a wide range of perspectives on the cryptocurrency market. Some regulators still wish that Bitcoin and other cryptocurrencies would go away, according to Malcolm. But other regulators see crypto as the next big opportunity in the financial markets and want to support and grow the ecosystem. 

​​Regulating the novel crypto market can be a daunting task, one that different countries are tackling in different ways, ranging from China banning it outright to El Salvador adopting it as legal currency. “For some [regulators] there’s a recognition that [crypto is] here to stay, that maybe regulators aren’t where we need to be in terms of understanding how to best regulate it without simply taking a sort of a copy-paste approach from the traditional financial world,” Malcolm said. 

Among investors, Bitcoin’s acceptance and regard have matured over the years, from being considered a scam or bubble it has now become the future of finance. People not only want to buy Bitcoin, but they have also started understanding it more. 

This diversity in knowledge of the crypto market is also why countries are adopting disparate approaches to regulating the crypto industry. For instance, in Taiwan, crypto exchanges and virtual asset service providers were included in the country’s anti-money laundering laws starting July this year. 

“The regulators’ perspective is this industry is really still quite small, so it doesn’t necessarily justify regulators putting so much effort into licenses to make this industry not only a regulated industry, but a licensed industry,” Huang said.

One outlier is Japan, however, which started issuing crypto licenses years ago. Licensing in the crypto industry not only attracts more entrepreneurs but also brings capital, Huang said. The best example, however, is not Japan’s but Singapore’s crypto license, which Huang said is the most widely recognized throughout Asia by both governments and financial institutions. 

“If you want to operate in the rest of Asia, then Singapore licenses offer better support in different jurisdictions and are well recognized by multiple big banks,” Huang said. 

With the recent high-profile launch of futures ETFs in the U.S., Bitcoin has been pushed into the world of traditional finance, opening it up to a wider group of people, Khurshid said. Khurshid is doing his part to push the envelope. His company recently received approval to launch a Bitcoin spot exchange-traded fund (ETF) in Europe. The spot ETFs are based on actual Bitcoin while futures ETFs are based on Bitcoin derivatives. 

Although regulators have matured in their thinking about Bitcoin, they are still skeptical about decentralized finance because of its non-custodial pseudo-anonymous nature, Tapscott said. Echoing his thoughts, Malcolm said: “The sort of full understanding of the DeFi market is probably not where it needs to be to have that appetite or that willingness to look at more innovative approaches to achieving the policy objectives.” 

Malcolm said the OECD will soon release a report about different regulator perspectives on DeFi and its regulation. To tackle DeFi and meet the traditional policy objectives of anti-money laundering and ensuring tax compliance, she added, regulators need to explore non-traditional methods of meeting these objectives.