Bringing regulators and the DLT community together
Regulators cannot effectively oversee the blockchain and cryptocurrency industry without the experts in the DLT community, writes The Hon Albert Isola MP, Gibraltar’s Minister for Digital and Financial Services
A few months ago, an explanatory memorandum drafted by the European Commission on the regulation of Markets in Crypto-assets (MiCA) was leaked to the international media. Subsequently, the regulations were published by the European Commission and the reaction has been mixed among the Distributed Ledger Technology (DLT) community. For example, some members of The International Association of Trusted Blockchain Applications (INATBA) have expressed concerns, while agreeing with the stated goals of the regulations. While the European Commission then clarified a number of concerns surrounding the legislation. The fact that this debate is ongoing, however, is irrefutably important and positive. No stakeholder will be happy with legislative decisions that are made by one side without consultation of the other, but what is most important is that both sides are learning from each other in the process.
The DLT industry is still relatively nascent
The importance of such discussions cannot be overlooked, especially in times of crisis. The DLT industry is still relatively nascent, although this year, in particular, has shown its potential for resilience in the face of adverse situations. In Gibraltar, we are immensely lucky to have avoided some of the very worst impacts wrought by the Covid-19 pandemic. DLT exists in a similar vein. The DLT industry cannot only withstand turbulent times. It is built to thrive throughout such times due to its very nature. Distributed Ledger Technology is, by definition, distributed, or decentralized. A DLT company does not have to exist on one peninsula or in one jurisdiction; it can operate independently involving multiple stakeholders in various corners of the world. This makes the DLT industry uniquely positioned not only to withstand the oncoming effects of subsequent waves of the Covid-19 pandemic, but crises in general. It is for this reason that the coming together of regulators and DLT industry players is of utmost importance.
Many economists have argued that outbreaks similar to Covid-19 are an unfortunate consequence of globalization and that if we are to continue to live in a globalized world, we must learn to adapt our societies and economies to do so. The regulation of DLT should be at the forefront of the minds of the regulators, for the very reason that this pandemic may not be an isolated event. We may have more crises, or more challenges in the future, and proactively preparing our economies and societies now rather than reactively embracing what is already on offer to us is simply not a viable option.
Crisis scenarios such as the global pandemic we face are at the extreme end of the spectrum, however Distributed Ledger Technology has the potential to weather turbulent times of all types. For example, in the face of the adversity we have all been burdened with this year, the Gibraltar regulator has had more applications in the first period of this year than in the same period of last year, signalling an ever-increasing appetite towards this groundbreaking technology during times of crisis.
We have been preparing for a potential scenario of a No-Deal Brexit. In any scenario involving Britain’s departure from the European Union, we are geared to supporting our burgeoning network of impressive DLT projects and companies based here, ensuring business continuity. Brexit will undoubtedly have an impact on Gibraltar, but the decentralized nature of DLT businesses will allow operations to continue as normal. We are wholly dedicated to continuing to push and invigorate our DLT community while making every effort to remain positive, hopeful and fully committed to facilitating the realisation of the immense benefits that this technology brings to Gibraltar and the world as a whole.
Longstanding change will impact how we face whatever comes next
Across the world, government responses to the pandemic have proven that vast change can take place in a relatively short period of time. Longstanding change will impact how we face whatever comes next, and it is essential that regulators and governments take action now to prepare ourselves for the future. The regulation of the DLT space is an equitable, common-sense and overdue option that should be seriously considered by governments all over, and when doing so, it is necessary to bring the experts to the table. By hearing every voice in the room, the best solutions to our world’s most pressing problems may be uncovered, and we can build a future economy together that is more efficient, transparent and fair for all.