Shetret stated that the regulations of cryptocurrency finance must be entirely different from those of the fiat sector. Veronica McGregor believes introducing possible centralized laws to control a decentralized ecosystem can turn into a disaster.
The regulation of blockchain-related digital assets is one of the most burning issues in the world of cryptocurrencies. Legal experts like Andrew Hinkes recently discussed the laws that might govern the crypto world soon.
It is necessary to remember that the world of blockchain-related finance does not have a clear regulatory framework. Although it has laws on digital mining and taxes, other sectors remain obscure in many countries. The most prominent among these are decentralized finance (DeFi), the thriving non-fungible token (NFT) market, and stablecoins.
Possible Impact of Future Regulations on Cryptocurrency Finance
The new regulations to apply in the crypto world will impact the market significantly. They will go from non-existent laws to a legal framework, which many consider abusive and watchful.
Liat Shetret, a senior advisor for crypto policy and regulation, considers that future laws in the DeFi universe will have positive and negative aspects. Among the latter could be to cleanse the decentralized market of criminals, considering that anonymity and the lack of third parties allegedly protect scammers.
She stated that the regulations on cryptocurrency finance have to be entirely different from those of the fiat sector. For that reason, she explained that it would not be possible to adapt some concepts from one area to another. She said that innovation allows bridging the gap between regulatory expectations and what DeFi projects need to do.
Other Relevant Aspects of Cryptocurrency Regulatory Frameworks
Introducing possible centralized regulations to control a decentralized ecosystem could end in incompatibility. Financial services attorney Veronica McGregor considers that this situation can turn into a disaster. She said that handing over the training platform of a decentralized entity to token holders would produce a centralized company.
Jeff Howard stated it was crucial to define the smart contract with which a given protocol works. That would allow creating new regulations to avoid applying existing ones that are not compatible.
The above legal experts agree that future regulations must be new and in line with this new form of finance. Mary Beth Buchanan said the primary concern of regulators is who develops KYC policies, launches tokens, and defines loan fees.
Stablecoins Are One of the Targets of Government Scrutiny
Stablecoins are digital currencies with a price tied to fiat currencies such as the US dollar. They are the basis of pairs of futures and spot trading and part of decentralized finance.
Due to their potential, the authorities view them as a considerable challenge to the dominance of the US dollar. Hinkes considers them to be one of the quintessential targets of government scrutiny. For example, the Treasury secretary of the Donald Trump administration warned that regulations were underway.
Likewise, Buchanan highlighted that many people use stablecoins all over the world. Therefore, although US regulatory measures prohibit them, those coins will not leave the market.
By Alexander Salazar
