Ripple, the fintech startup behind XRP – one of the top 3 cryptocurrencies in the world – is reportedly seeking government regulation for cryptocurrencies, to curb money laundering, financial instability and to protect new entrants in the highly speculative and risk-laden crypto market.
Citing Japan as an example, Ryan Zagone, the head of regulatory relations at Ripple, urged Britain’s regulators to adopt an approach which reduces risk without suffocating innovation.
“We’re at that time now where we need more clarity and rules and we need more certainty. It’s a good time to start revisiting that ‘wait and see’ approach taken by regulators,” he said.
Britain introduced a crypto task force last month, including officials from the Bank of England, the national treasury and the regulatory authority FCA. However, Zagone offered the example of Japan as a global leader in crypto regulation, claiming the country took a proactive and productive approach towards crypto-assets.
When Japanese exchange Coincheck was hit by a costly hack earlier this year, for example, Japan’s financial watchdog – the FSA – not only reprimanded the crypto exchange, but launched probes into all registered exchanges in the country.
Following initial investigations, the FSA released a number of recommendations, and gave exchanges deadlines to implement these – while some exchanges were suspended, those adhering to government rules were allowed to function in the country.
Earlier this year, Bank of England Governor Mark Carney proposed the need for immediate and thorough regulation of the crypto space. Zagone is of the view that regulations will allow the space to mature and facilitate new investors.
“Regulation creates the guardrails on the highway that allows new entrants to come in, particularly institutional investors,” he said.
Although cryptocurrencies have put governments and central banks worldwide on high alert, many are still grappling with the challenge of trying to regulate these emerging digital assets. For now, Bitcoin and its peers are hovering in a limbo of sorts, with regulatory uncertainty having played havoc with the crypto market. However, while some believe cryptocurrencies are nothing more than a fad (or a ‘disease’ as Barclays terms it), others believe that, given the recent political climate and global instability, a future of blockchain-powered money may not be far off.