An independent think tank for central banking and economic policy believes that crypto regulation should be implemented in a way that does not stifle the sector and stifle innovative ideas.
The aftermath from FTX's collapse has established the groundwork for further regulatory clarity, but Patricia Haas Cleveland, US president of the Official Monetary and Financial Institutions Forum (OMFIF), cautioned that this drive should be made cautiously. Haas commented:
“The real story in the wake of FTX is less about cryptocurrencies than advances in the underlying blockchain and other technologies,”
“These are quietly creating transformational tools and applications that will help propel Web3 and reshape the financial industry.”
New York-based banker Haas Cleveland has held executive positions in a number of financial institutions, including the US Treasury, the European Bank for Reconstruction and Development, and Citigroup. She has additionally assisted early-stage Internet businesses and served as a financial advisor to the Asian Infrastructure Investment Bank.
She cited evidence of a crackdown on the industry as the SEC's record enforcement actions against crypto players in 2022, a study on stablecoins from the President's working group, and a legislative subcommittee on digital assets.
She also included a warning for regulators, noting that technological advancements are having an impact on both traditional finance (TF) and decentralized finance (DeFi), where distributed ledger technology is being used to speed up transactions and payments.
The usage of blockchain by HSBC and Goldman Sachs to facilitate settlements and the custody of digital assets was cited as an example of a good use case.
At the OMFIF roundtable in Washington on January 23, among the issues highlighted were worries that regulations would stifle the cryptocurrency business. Speaking during the debate were Lee Brenner, head of public policy for digital assets at Goldman Sachs, and Timothy Massad, chairman of the Commodities Futures Trading Commission under President Barack Obama.
According to Haas Cleveland, the challenges of scalability and accessibility will be overcome, and new opportunities will arise, enabling open-source blockchains to benefit from increased data privacy, speed, and affordability. She added:
“Ensuring the guardrails for investor protection and financial stability are in place is important, but it is equally important to allow development and evolving technologies to thrive. Without that, we miss out on improvements to financial products, services and inclusion, as well as opportunities for risk mitigation”
“Greater regulatory action may be called for, but regulators must not stifle innovation.”
