According to a global RegTech (regulatory technology) firm CUBE, there has been a sharp uptrending in regulations targeting the crypto space, with regulatory bodies mainly in North America and Europe aiming for everything from non-fungible tokens (NFTs) to stablecoins and ordinary cryptocurrencies,
In crypto-related regulatory messaging in the past four years, there has been an increase of 7,436% in comparison to pre-2018, stated in a new report by CUBE.
The crypto market has become a crucial part of the global financial system, and that risks from crypto could spill over into traditional markets, according to the report.
“As the participation of investors increases for cryptocurrency, so too do the risks that market volatility for crypto could have a knock-on effect for the global economy. It is fast becoming a financial stability risk,” the report said.
North America and Europe are accounted for 51% and 32%, respectively, of all new regulations in the space, CUBE added.
The US Securities and Exchange Commission (SEC) and the UK Financial Conduct Authority (FCA) have been among the most active in issuing new regulations in these regions.
CUBE finds that regulators have missed the sustainability part of crypto. According to CUBE CEO Ben Richmond, global regulators need to push forward regulations to show that crypto can “thrive without undermining” efforts to curb climate change.
Richmond admitted that there are “aspects of ESG [Environmental, Social, and Governance] and crypto that do work in tandem”. He further argued that the failure to address the environmental impact of crypto will lead to “an inevitable clash of two titans that could set the trajectory of the modern financial world back significantly.”
In conclusion, it is said that “time is running out before the volatility of crypto bleeds into global financial stability.” As a result, it is likely that regulators, in an attempt to yield faster results, will “stretch existing regimes to cater for cryptocurrencies.”
The report added that,
“In turn, they may use stablecoins as a blueprint for new regulation to come. Undoubtedly, international bodies will work tirelessly to tie centralised regulation together with a decentralised currency.”
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