Experts have reiterated calls to regulate global crypto-markets, saying it’s the only way financial institutions will be pushed out of their ‘comfort zone’ and into the blockchain.
Key to the boom in popularity of crypto finance has been decentralisation and a move away from hard and fast legislation.
But specialist Luka Gubo, speaking at last week’s Blockchain Expo Global held at Olympia London, is pushing for unified regulation to remove barriers to trade and encourage credibility.
“Currently, it’s difficult for blockchain firms to partner with banks and the problem is largely regulatory,” said Gubo, who is also CEO of new crypto trading platform Blocktrade.com.
“As a bank, if your CEO says cryptocurrency is a scam, you – as a compliance officer – will be reluctant to align with any businesses operating within that sphere.
“Although the technology itself is superior and offers solutions there’s a problem in terms of credibility.
“When we’re talking about blockchain technology and banks, it’s clear that there can be significant improvements in settling transactions, particularly in terms of post-trades.
“And blockchain technology will definitely make its way into the international banking markets. Personally, I have no idea why banks have so far been reluctant to embrace blockchain.
“But a huge problem we have right now is regulatory uncertainty.
“In Europe, we have many countries opening up to crypto and the blockchain start-ups. But then you look at Germany and they’re not super supportive.
“We should have unified regulatory frameworks – not only across Europe but across the globe – which won’t be restrictive, just outline the rules governing the usage of blockchain technology.”
Gubo suggests regulation of the industry could also help calm the ‘volatility’ of a currency prone to wild market swings.
In a ‘Transforming Financial Services’ panel discussion at the Expo, he added: “There’s a lot of speculative valuing in crypto currencies, so there’s no way to lower the volatility besides regulation to lower the risk.
“Also when institutional money comes into the cryptocurrency sphere we can expect a lower level of volatility.”
Last month finance ministers meeting at the G20 Buenos Aires summit pulled back from calls to regulate global crypto-currency markets, instead vowing to monitor developments and take action when necessary.
That’s despite G20 leaders acknowledging that crypto assets raise issues when it comes to tax evasion, money laundering, terrorist financing and also simply in terms of the integrity of crypto exchanges.
Bank of America’s Dennis O’Connell meanwhile has also echoed calls for regulation to reduce volatility.
The senior global architect, again speaking on the Expo’s Transforming Financial Services panel, stated: “On the volatility aspect, I do think it’s going to be a combination of regulation coming in, as well as institutional money coming in and buying crypto currency that will help.”
He later stressed: “Regulators are cautious of two things – they want to bring smart regulation but they don’t want to stifle innovation.
“I think what has been done correctly by the banks is that they’ve made it quite clear that blockchain is the future and they need more regulation, but they don’t want regulation to become the primary hindrance.”