Davos, Switzerland—both regulatory agencies in Europe, An Arab legislator and a single head of cryptography sat down with a reporter in a snowy ski resort on Thursday – and pretty quickly, It was a choking room.
The four made up the only mainstage panel focused explicitly on crypto at this year’s World Economic Forum (which was notably less prominent than at last year’s programming, pre-FTX collapse). Although stakeholders agreed that there is a need for global space oversight, they did not hesitate to respond to the recent chaos in the marketplace and the corporate meltdowns that sent industry and regulators on a desperate mission of rebranding and consolidation.
It started with omar bin sultan al olama, U.A.E. Minister of State for Artificial Intelligence and the Digital Economy, affirming that the regulatory approach favourable to innovation in its jurisdiction was far from "light" and did not guarantee any cryptography companies, including ripple, CEO Brad Garlinghouse was sitting next to him – currently licensed by the United Arab Emirates surveillance agency, the regulatory authority for virtual assets (vara).
The minister faced tough questions from Stacy-Marie Ishmael, Bloomberg’s managing editor for crypto, on why Dubai tends to come up as the favored destination for disgraced crypto founders seeking refuge or resurrection.
Bad actors are looking for jurisdictions like Singapore, London or Dubai because "people give" these places "some credibility," Olama said.
Addressing reports that collapsed crypto enterprise Terra’s founder Do Kwon had come to Dubai as authorities in South Korea launched a global search to locate him, Minister Al Olama claimed he hadn’t.
"I read an article that said it was in Dubai, and I picked it up. The guy wasn't around," said the minister.
Klaas Knot, president of the Dutch central bank and head of the Financial Stability Board, an international group, took aim at jurisdictions that attract crypto types for having lax oversight – a subject that has come to the forefront as the abrupt collapse of Sam Bankman-Fried’s Bahamas-based FTX revealed poor management and misappropriation of company funds.
"a lot of these crypto resources are available from places that I would call sunny places for shady people," node said.
Minister Al Olama subsequently responded to the regulator's argument, claiming that bad actors have no "nationality" or "destination.”
"You shall see them all around." You'll find them in the Bahamas, See them in New York City, london, and we have to work together as governments, also with industry, to make sure that if somebody does something wrong, they can't move around," he said.
"One is that the benefits of this technology are undeniable. I mean, no one doubts the use of technology," node said.
Knot’s statement was a sharp turn from the Dutch central bank’s previous stance that blockchain is inefficient. Thursday roundtable discussion, however, node stated that regulators have been 'so busy' on the 'risk mitigation' side of cryptography and have therefore paid less attention to exploiting the benefits of technology.
As the only crypto representative on the panel, garlinghouse has done its best to defend the integrity of the industry following last year's multi-trillion-dollar market sell-off. 'Over time, I think we will spend less time discussing mt. Gox and silk road and more time to talk about real use cases at the company level where this is not an experience," garlinghouse says.
Both Garlinghouse and Mairead McGuinness, the European
commissioner for financial services, financial stability and capital markets union, emphasized the need for regulators to focus more on consumer protection measures as thousands of global retail investors took the hardest hit from the crypto collapses of 2022.
'A lot of people suffered because of what happened now. It is therefore possible that the effects on financial stability will not be immediate, for individually stable operation, financial and mental health benefits, That can be extremely dangerous," McGuinness said, which has steered the historic markets of the European Union and crypto assets (mica) regulation which is now in its final stages of approval.
Previous discussions around crypto and blockchain regulations outside the main congress hall this week also homed in on a need for regulators to pay more attention to consumer protection measures instead of threats to financial stability in the aftermath of FTX and similar meltdowns.
The bedrock of crypto regulation needs to be global, McGuinness said, a point she reiterated in an interview with CoinDesk following the panel.
Speaking of Sam Bankman-fried, Minister Al Olama said: If another person arrives and does exactly the same thing in another country, we will all have failed as governments. This is a lesson we must learn today and ensure it is not repeated tomorrow."
But as far as the regulation of cryptography, decentralized finance and even non fungible tokens is concerned, even the European Union, with its complete MiCA package, is behind.
'Sadly, we cannot wait until the next disaster. We are already lagging behind," said Minister Olama.