How the regulation debate continues to rage in the crypto world

In the somewhat elusive world of blockchain, cryptocurrency and decentralised finance or DeFi as those in the know call it there is one debate that continues to loom large as players in the field unanimously move for greater awareness of the emerging tech that they hope will ultimately pave the way for mass adoption.

That debate is regulation.

Regulation allows us to grow the space, and its in everyones interest to grow the space, Binances Middle East and North Africa director Omar Rahim said at the World Blockchain Summit in Dubai.

DWTCA, SCA team up to regulate crypto assets in Dubai

Under the agreement, SCA will oversee, monitor, and inspect entities operating within DWTCA’s free zone

Less confident in the role of regulation in the space that is defined by its decentralisation is Nick Saponaro, the 28-year-old CEO of Divi, a crypto platform.

Theres a level of regulation that makes sense, Saponaro told Arabian Business on the sidelines of the conference. Saponaro, who is from the US, promises hes not an anarchist, but crypto is in many ways, he said.

So far, most regulation, at least in the US, focuses on how to tax the tech to control monetary policy, with other governments, including the US regulatory body, concerned about using the system for illicit trade and scamming, which has happened as some crypto coins have emerged and disappeared with the founder making off with large amounts of cash.

If those in the crypto world are right, the system theyre developing threatens to upend the traditional, centralised monetary system which beyond payments is used to generate government revenue via taxes.

Manuel Blanco Appleby (pictured below), the Mexican founder of Gaugecash, said the technology exists to incorporate a taxation mechanism into the blockchain by taking a small portion as small as 0.001 percent of each transaction that would flow instantaneously into government coffers.

If the government of Brazil comes to me and says: We will ban the system, because we need taxes, I understand that, Blanco Appleby told Arabian Business. From a taxation and public policy perspective, there are more questions than answers, but with the blockchain technology, its possible.

I think it could be a win-win situation, he said.

Arabian Business asked Saponaro, who is reticent of regulation, what governments should do. I think allow people to move fast and break things, but not break the law and not put people at risk, he said. And work with the professionals in the space. We are happy to explain it.

How much regulation is right? What form should regulation take? Even should there be regulation at all? These are questions that hang over the entrepreneurs in this field who largely see this world as a replacement to the traditional monetary system (theres no agreement on how long itll take to get there).

But questions remain on how to adequately conduct know-your-customer checks and enforce anti-money laundering.

Governments globally have reacted differently to cryptocurrency trading platforms that begin offering services in their jurisdictions. The most notorious is Binance, which has faced regulatory pressure from a spate of governments from the US to Singapore.

Recently, Bank of England deputy governor Sir Jon Cunliffe warned that digital currencies could trigger a financial meltdown, like in 2008, unless governments step forward with tough regulations.

Some, like China, have banned it outright. In other countries, like El Salvador and Venezuela, governments have welcomed the highly volatile digital currencies as they manage to represent greater stability than their collapsing national currencies. Yet others have moved to establish central bank digital currencies (CBDCs). In the UAE, the government has opened its doors to crypto, establishing incubators and accelerators built for purpose.