Fire Hose: Crypto firms call for global consensus instead of “fire hose” of rules

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A “fire hose” of dif­fer­ing reg­u­la­to­ry approach­es to cryp­toas­sets lack the glob­al con­sen­sus need­ed to attract estab­lished investors that would cre­ate a matur­er mar­ket, a con­fer­ence was told on Wednesday.

The Euro­pean Union has finalised the world’s first com­pre­hen­sive rules for cryp­toas­set mar­kets, known as MiCA, but oth­ers like Britain and the Unit­ed States are fur­ther behind.

Apart from com­pli­ance with rules to stop mon­ey laun­der­ing and ter­ror­ist financ­ing, cryp­to firms are large­ly unreg­u­lat­ed in many parts of the world.

“It’s real­ly com­mend­able that Europe was able to get that done so quick­ly,” Hes­ter Peirce, a com­mis­sion­er at the U.S. Secu­ri­ties and Exchange Com­mis­sion, told a Finan­cial Times conference.

“If we built a good reg­u­la­to­ry regime, peo­ple would come. I think you will see that with MiCA. We are shoot­ing our­selves in the foot by not hav­ing a reg­u­la­to­ry regime in the U.S.,” Peirce said.

U.S. Con­gress need­ed to decide which reg­u­la­to­ry body has author­i­ty over cryp­to, Peirce added. 

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U.S. deriv­a­tives watch­dog CFTC is also cast­ing an eye on the sec­tor as the need for clear­er rules becomes more press­ing after last year’s col­lapse of cryp­to exchange FTX. But in the absence of oth­er legal frame­works, EU rules will inevitably serve as inter­na­tion­al norms until there is con­sen­sus on a glob­al stan­dard, said Eva Gus­tavs­son, head of pub­lic affairs at cryp­to firm Copper.

“We are drink­ing from a ver­i­ta­ble fire hose right now of reg­u­la­to­ry pro­pos­als, and that’s all over the world,” Gus­tavs­son said.

“I think it would be unre­al­is­tic for any firm to think they were not going to need to com­ply with any­thing rather quickly.”

Glob­al stan­dards and har­mon­i­sa­tion as much as pos­si­ble are key, said Sarah Pritchard, exec­u­tive direc­tor for super­vi­sion at Britain’s Finan­cial Con­duct Authority.

There would be glob­al pol­i­cy pro­pos­als short­ly from IOSCO, an umbrel­la body for secu­ri­ties reg­u­la­tors, Pritchard said.

Gus­tavs­son said more clar­i­ty on reg­u­la­tion would see more tra­di­tion­al, insti­tu­tion­al investors enter­ing the cryp­to mar­ket to “mature it further”.

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