WEF will ‘spectacularly fail’ unless it advances crypto rules

The stark message from Nigel Green, CEO of the financial advisory firm deVere Group, comes as many of the world’s business, financial, economic, political, media, academic and civic leaders head to the Swiss mountain resort for the annual four-day conference. The event is returning to its traditional timeslot and destination after two years of pandemic-triggered disruption.

This return coincides with Bitcoin, the world’s biggest cryptocurrency by market capitalisation, recording a resurgent 28 per cent jump in value since the beginning of January. 

Green said: “The leaders assembled in Davos at the WEF must next week return home to their governments who then need to insist that their financial regulators must stop ‘talking the talk’ and begin to up the ante on regulating the cryptocurrency market.

“The time for endless platitudes on greater regulatory scrutiny is over. Action is required. Should those in attendance at the WEF not advance the agenda of crypto regulation as a result of the 2023 summit, they will have spectacularly failed.”

Green, a long-standing champion of digital currencies such as Bitcoin, cited three key reasons why regulation is needed: “First, as more and more institutional investors – including pension funds, mutual funds, investment banks, commercial trusts and hedge funds – as well as individual investors, increase their exposure to crypto, and as mass adoption increasingly takes hold, inevitably cryptocurrencies will play an ever-greater role in the international financial system. Yet crypto remains a relatively young market and, therefore, a volatile one.

“As such, in the interests of avoiding wide-scale disruption to the safety and soundness of the broader global financial system, crypto must be brought into the regulatory tent and held to the same standards as the rest of the system.”

“Second, after a year of significant crypto firm collapses, accusations of top-level fraud and prison sentences for insider trading, there’s no denying that greater scrutiny would help protect investors.

“Third, regulation could provide a potential long-term, sustainable economic boost to those countries which introduce it, as crypto is widely regarded as the future of finance.”

What is needed now, Green said, is a workable internationally agreed and recognised regulatory framework that “is sensible and doesn’t hamper innovation or compromise the inherent nature of the digital assets and market.”

After Bitcoin went above $21,095 on January 13 this year for the first time since November 8 2022, Green told the media that, “The ‘crypto winter’ is thawing amid growing signs that inflation is beginning to cool. Of course, the crypto market will not go in a straight line – no market ever does – but we expect the bears to go into hibernation and bulls are ready to run!”

He concluded: “Cryptocurrencies are here to stay and the market is only set to grow exponentially. There can be no doubt that regulation of the crypto ecosystem is required and it should be a priority at this year’s WEF in Davos.”

Last week, Britain’s financial services minister said that the prospective introduction of a digital pound is still “an if and not a when”, as the UK prepares a public consultation on its introduction.

In December 2022, the UK government was reportedly finalising plans for a package of sweeping rules to regulate the cryptocurrency industry and impose order on such virtual financial products.

The UK’s intentions mirrored that of the EU, announced in July 2022, wherein European Union officials secured an agreement on a groundbreaking set of rules to guard against abuse and manipulation in the cryptocurrency market, the first such major regulatory framework cryptocurrency industry.

The huge energy demand of mining cryptocurrencies such as Bitcoin is often called into question, even as the various competing exchanges make strides in reducing their respective environmental impact.