Promotion of sustainable ‘cryptoization’ by global standard setters (November 2021)

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Foreword: METI Advisory wrote this report for SEBA Bank AG. Abstract: October 2021 witnessed several fundamental policy pronouncements on cryptofinance by global standard setters. These aimed to set the policy direction for cryptocurrencies (or ‘crypto’) in the foreseeable future. The emerging global policy message from standard setters such as the International Monetary Fund (IMF), Financial Stability Board (FSB), Bank for International Settlements (BIS), International Organization of Securities Commissions (IOSCO) and the Financial Action Task Force (FATF) is supportive. Risk-based regulations should support the buoyant ‘cryptoization’ (a term introduced by the IMF in its latest Global Financial Stability Report (GFSR)) of economies, and the potential role of stablecoins in enhancing cross-border payments should be recognised. Furthermore, developers of decentralised finance (DeFi) applications should be assured of a pragmatic and selectively permissive regulatory stance. On balance, global standard setters intend to introduce supportive regulation for cryptoization to ensure the societal sustainability of distributed ledger technology (DLT)-based innovation.
In a significant development in cryptofinance, the United States (US) Securities and Exchange Commission (SEC) authorised a bitcoin futures exchange-traded fund (ETF) for the first time on 18 October 2021. Other notable regulatory developments include progress in the central bank digital currency (CBDC) space in Hong Kong, France, Georgia, Ghana, and Nigeria, and material regulatory/governmental cryptofinance developments in jurisdictions such as Australia, Malta, Guernsey, Sri Lanka, and Russia.