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Industry experts call for regulation and sandboxes for digital assets

industry, experts, regulation, sandboxes, digital assets, cryptoThe digital assets industry needs robust regulation to move on from the negative market headlines caused by the collapse of crypto exchange FTX at the end of last year.

There also needs to be greater use of regulatory sandboxes to ensure that any regulation is able to offer investor protection while allowing for innovation.

These were the opinions voiced in a recent webinar held by Funds Europe.

“We need to change the narrative of ‘another month, another crypto crisis’,” said Natalie Berkecz, global head of regulatory product at Northern Trust, when asked if the FTX case has strengthened the case for more regulation in the digital assets market. “Consumers need confidence that crypto assets have longevity and that the asset class is secure and robust.”

Furthermore, the fact that some digital assets currently fall outside of current rules makes it harder for institutions to invest and realise the benefits of the nascent asset class.

Berkecz also highlighted the positive impact the EU’s forthcoming Markets in Crypto Assets (MiCA) could have on the market in terms of providing both legal certainty and some harmony to Europe’s currently fragmented regulatory landscape.

Fellow panellist Angus Fletcher, CEO of Fnality UK, the blockchain-based wholesale payment system, argued that any new rules introduced for digital assets should follow the ‘same risk/same regulation’ principle.

“If something looks like a payment system, it should be treated like a payment system. But while there should be a technology-agnostic approach where possible, the technology does enable things to be done in a different and more efficient way,” said Fletcher.

This is where sandboxes could play a vital role, said Fletcher. They enable regulators to examine the potential benefits and whether the regulation should change to accommodate the technology.

The webinar, Digital Assets: A Regulatory Lens, can be accessed here

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