The multibillion-dollar collapse of the Terra-LUNA stablecoin alerted regulators around the world to the need for regulations for the burgeoning crypto industry in an attempt to protect investors from losing their hard-earned savings.
However, regulatory efforts in silos are unlikely to help bring oversight to a highly decentralized industry, panelists speaking at Forkast’s recently live-streamed event “Crypto Rising: The future of crypto regulation: APAC and Beyond,” said.
“It would make a lot of sense for us to continue our conversations with other policymakers, to try and agree on some common standards around market licensing custody arrangements,” said Australian Senator Andrew Bragg, adding “that’s in all of our interests.”
A race to protect consumers
With a reputation as a regional leader in crypto regulation, Australia made news this week by announcing a new plan to regulate crypto through a process called “token mapping.” which seeks to categorize digital assets by their utility and by examining their underlying code.
Bragg, now in the Opposition after the results of Australia’s recent Federal election, is quite critical of this plan, however, saying much of the research has already been done that Australia only has 12 months to maintain the strong position it has built as a regional leader for crypto regulation.
“We are in a global race for investment, we’re in a global race to keep the investment that we have in the country. But we’re also in a global race to show how consumer protection rules can be established,” he said.
While Carolyn Bowler, chief executive officer of Australian crypto exchange BTC Markets Pty Ltd., has previously supported the new plan, on the Crypto Rising panel she said time is running out for global regulators to come to terms with the technology.
“The horse has bolted,” she said, “you cannot ban it; it’s not going to work. We just need to put proper safeguards in that provide the necessary protections without smothering or patronizing crypto investors throughout the world.
“If we don’t do it in Australia, they’re going to go elsewhere,” she added.
Often regulation comes down to a choice between consumer safeguards and innovation, but Bowler said there was a need to address both concerns.
“I don’t think it’s a binary choice and I think that certainly the enthusiasm, the passion within the Australian crypto community, within the developer community around these projects, that’s second to none and it’s only growing and certainly that pace is not going to stop.”
In Hong Kong, the Securities and Futures Commission (SFC) is launching the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) in September which will introduce a licensing regime for virtual asset service providers.
A more nuanced view
Founder and Chief Executive Officer of financial services company Stratford Finance Ltd., Angelina Kwan told the panel the SFC was taking an open view to the sector after initial discussions in 2019 would have limited retail investors from trading in digital assets in the jurisdiction — leading to some exchanges even leaving Hong Kong.
“There are already discussions of exchanges that have left Hong Kong to come back to Hong Kong and get licensed,” Kwan said, adding that these new regulations would create a much more even playing field for parties to be licensed as everyone would be going through the same process.
Kwan also said increasingly strict crackdowns on crypto trading in China in recent years have seen many crypto players have moved further afield to jurisdictions like Macau and increasingly Hong Kong as they are more welcoming in terms of regulatory environments.
Rolling out the red carpet
In recent years both Singapore and Hong Kong have been vying to wear the crown of the APAC crypto hub, Hong Kong’s licensing regime would give the territory a real win over the Lion City — but not so fast says Hassan Ahmed, crypto-exchange Coinbase Head of South East Asia.
“I do think that Singapore does have real aspirations to be a global crypto hub,” he said. “If I’m a crypto user, I want access, options, and protection. And I do think that Singapore does provide a very healthy balance of the three.”
Ahmed also advised regulators taking a narrow view of digital assets by examining only their price movements does a “grave disservice” to the technology, and that Coinbase is working to onboard as many users into the technology as possible.
“Getting users to access crypto assets and then getting to use crypto assets for the purpose of what they [made] are for, that’s the magic moment that we’re trying to get everybody towards,” he said.
As a long-time advocate for the crypto industry in Australia, Bragg recognizes these possibilities and said as much as consumers need to be considered, ultimately, they need to take some responsibility for their own investments.
He recounted a speech given by the chair of the Australian Securities and Investments Commission who said if consumers are going to invest in digital assets, “they need to be prepared to lose their shirt.”
“Now in Australia we have great beaches and we have flags on our beaches where you can swim if it’s safe,” he said. “There’s no guarantee there won’t be a shark — but certainly there are lifeguards,” Senator Bragg added. “That’s the sort of model that we’re having to move towards where there will be a system of regulated or protected schemes.”
