Like a ship emerging through the fog, the outlines of regulatory clarity areare becoming visible in many different parts of the world, even though the United States isn’t one of them. From Japan to Dubai to the EU, the rules and regulatory models for cryptocurrencies, digitized real world assets and stablecoins are taking shape.
Paul Brody is Global Blockchain Leader for EY (Ernst & Young) and the author of “Ethereum for Business: A Plain-English Guide to the Use Cases that Generate Returns from Asset Management to Payments to Supply Chains.”
The future is one where it will be possible to legally issue all kinds of digital assets, and that legal and regulatory structure will reduce risks and unleash a torrent of investment in the space. So pack your sunscreen, the bblockchain summer is coming.
It’s worth, at this moment, contemplating what the limits of regulatory clarity will bring. Let’s just start with something simple like cryptocurrencies. Regulatory clarity will certainly reduce or largely eliminate the risk of crypto exchanges absconding with your digital assets. It will also eliminate the possibility that people will buy an asset one day only to find it is illegal and illiquid the next day.
Regulatory clarity will also give people more confidence in stablecoins, knowing they are backed by actual currency or government bonds and overseen by banking or securities regulators. It’s notable already that many stablecoins are backed one-for-one by currency, and actually have a lower risk profile than a traditional bank deposit, which can be re-loaned out to other people. Europe’s incoming MiCA regulations implement similar rules for a wide range of asset-backed coins, not just currency, but oil, gold and other commodities as well.
What regulation can’t do
What regulation cannot do is protect people from making bad investment decisions. And the opportunity to do so in a world of digital assets is nearly unlimited. Take something basic like cryptocurrencies. The premise of a digital asset like Bitcoin is that it functions like gold, only better. The supply is limited in total, and the release process is governed by an algorithm.
What isn’t limited is the number of bitcoin clones and variations out there. There are literally thousands of them. Most of them are likely, in…
Click Here to Read the Full Original Article at Cryptocurrencies Feed…
