This week, the meeting of the World Economic Forum in Davos, Switzerland, began. And two themes drew a lot of attention. First, discussions around artificial intelligence and the ChatGPT program. The second theme is the demand for cryptocurrency regulations. With the presence of regulators, bankers and government authorities, cryptocurrencies have been among the agendas of recent days. In this sense, all governments clamored for the regulation of what they called the “non-banking sector”. The first debate in this regard took place between Senior Minister Tharman Shanmugaratnam, from Singapore, and François Villeroy de Galhau, member of the Board of Directors of the European Central Bank (ECB). Both emphasized the need for regulation during a panel discussion on the difficulties faced by banks. Then UBS Group AG chairman Colm Kelleher also called for rules. According to Kelleher, regulators had “taken their eyes off the ball with respect to the non-banking sector,” allowing fraud to develop without any oversight.
Demand for regulation
Villeroy reacted, citing recent instances of financial instability in the traditional market, such as the performance of UK pension funds. According to the Frenchman, the collapse was due to investments driven by liabilities and the end of Sam’s Club. In other words, Villeroy meant that banks are the most challenging in today’s times. But he also warned against financial institutions that are not linked to the banking sector. After all, according to the adviser, these financial institutions are still not subject to clear rules. For the Frenchman, the financial scenario is undergoing changes and requires quick action by governments in the sense of creating non-banking regulation. And, naturally, Villeroy stated that this must start with cryptocurrencies. Tharman, on the other hand, decided to focus on fighting crime as the objective of regulation. For example, the minister said that it makes no difference whether the company operates in the regular financial sector or cryptocurrency, but that basic rules must be obeyed to avoid crimes such as money laundering.
Blockchain is “unstoppable”
Finally, the president of UBS reaffirmed a sentiment often expressed by executives of traditional banking institutions and cryptocurrency companies. And such thinking is summed up in the following sentence: “if you can’t beat them, join them”. Kelleher stressed that there is no point in trying to fight cryptocurrencies and blockchain, which he called an “unstoppable” technology. The executive even mentioned that part of UBS customers want to invest in digital tokens. “We are looking for a regulatory framework that will allow us to accommodate it for our customers,” said Kelleher. However, the executive warned of the current challenge of ensuring compliance with laws and policies related to KYC (Know Your Customer) standards and anti-money laundering rules. In his view, sector regulation must combine investor protection and freedom of innovation.
