Stakes get higher for digital asset regulation
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Aïda Amer/Axios
The stakes in regulating digital assets now go far beyond cryptocurrencies, as the technology begins to reshape how money moves, financial markets operate and countries control their currencies.
Why it matters: The central challenge for governments is allowing the useful features of digital assets into mainstream finance while protecting financial stability, according to a new report from the World Economic Forum and Boston Consulting Group.
The big picture: Cryptoassets like bitcoin, ether and sol dominate the digital asset landscape with roughly $3 trillion in market cap, but the report argues that advances in digital money and tokenization may prove more consequential.
- Stablecoins and tokenization could enable faster, cheaper cross-border payments, near-instant settlement of financial transactions and more efficient use of collateral.
- That's helping blur the lines between crypto-native firms and traditional financial institutions in areas like banking and payments.
- Monetary control is also at stake, as dollar-backed stablecoins could expand the dollar's global reach while weakening other countries' control over their currencies.
Between the lines: The report, described by its authors as a playbook for digital asset regulators, recognizes that countries are taking different approaches, shaped by their legal systems, financial structures and policy priorities.
- That's not necessarily a problem, they say. "The objective is to establish sufficient consistency and cooperation to support safe cross-border activity while preserving legitimate national choices."
What they're saying: Participants in a WEF event launching the digital asset report, moderated by Axios Pro's Lucinda Shen, addressed activity in the U.S.
- "Congress is fundamentally pro crypto... but, the folks that will take over the chairmanship of the key committees are very anti-crypto," said Coinbase chief policy officer Faryar Shirzad. "Time will work that out, I think. A lot of the rule writing will happen at the regulators."
- "From an industry perspective, I think the single most important thing that feels different now is that we have a lot of live production coming online — particularly in the U.S. market," Samara Cohen, Blackrock's global head of market development said. "The DTCC pilot went live... that's the first scaled project happening onshore in the U.S.."
The bottom line: The deeper digital assets move into mainstream finance, the harder the regulatory decisions become — and the bigger the stakes become.
