Jan 25, 2023

As the European Union's sweeping Market in Crypto-Assets legislation, also known as MiCA, is moving towards becoming law, Linda Jeng, Chief Global Regulatory Officer at the advocacy group Crypto Council for Innovation, discusses the global state of crypto policy.

Video transcript

The state of crypto is presented by Tron connecting the world to the power of Cryptocurrency. Welcome back. Just a reminder that it's policy week at Coindesk and joining us now to discuss global policy is Linda Jeng, Global Chief Global Regulatory Officer at the Advocacy Group Crypto Council for Innovation Innovation. Welcome, Linda. I'm happy to have your global perspective. I also do a lot of global stuff here at coin desk. So it's very welcome to sort of put this all in a larger, you know, for the larger picture here. So let's just, I mean, there's so much happening all over the world, there's regulatory movements happening in Europe, you know, Asia is kind of heating up again after a while. You know, the US is in a state of, I don't know, chaos, I guess. Um But let's let me just ask your opinion. I mean, what do you, how do you, where do you see, where do you see the US fitting into kind of the larger global picture? Do you feel that the US is is falling behind? That's been a critique that we've heard quite a lot on the show. Do you feel like the US is catching up if you could just sort of lay out how you sort of see the big picture here. Well, first of all, thank you for inviting me and I want to say, uh it's uh really an honor to speak at your first policy week. The US unfortunately is lagging behind. If you want broad adoption of crypto, you need rules of the road and the eu was the first out of the gate. And so if we are going to be leaders in the crypto markets, as well as regulation, we have to begin adopting our own rules. And therefore uh what happens is um currently um with the Eu already out with their regulation MC A, you see UK is developing something similar, Australia already has a consultation that just went out along with Singapore. And then Hong Kong is planning on coming out with a consultation of its own this spring. So you can see it's literally a cascade. So whoever is the first mover gets to influence the regulations of the rest of the world? That's, yeah, it's so interesting. I mean, where do you think that where do you think it's going to be the next hub? Right? Because we're sort of it, that's what's so interesting about crypto is that it's always shifting, right? So Singapore was sort of king for a while, you know, but you just mentioned Hong Kong, I think Hong Kong was super interesting, but there's some debate about how open Hong Kong will really be. Um do you see more crypto shifting to Asia in the in the near future? Well, Hong Kong already signaled that it wants to open up its retail markets to crypto whereas Singapore is signaling that it wants to close its crypto markets to its retail markets to crypto. So uh so there are we're getting mixed signals uh from different parts of Asia. But what is really interesting about having regulatory frameworks is it gives crypto startups the ability to access the banking infrastructure. And right now MC A is allowing European crypto startups to register and therefore get banking accounts. Whereas here in the US, we don't really have rules. And recently we had that joint statement by the banking agencies essentially warning banks not to bank crypto startups. That's interesting. Uh You mentioned ma uh the markets and crypto assets legislation in Europe that's already been postponed twice most really pushed to April. But if it does become law in the eu, maybe you could tell some of the highlights, you mentioned that it'll make it easier for crypto companies to get bank accounts. So what about obtaining insurance and the like? Mhm Yeah. So it will be adopted. It's just that in Europe, you have to translate the text into uh 24 some languages and that's mostly the hang up finding the legal experts in those languages to translate. But once it is adopted um they will have until 2024 to choose to reg uh to register with uh eu institutions. And then once they register, they uh have to get insurance as well as bank accounts. But this also gives a green light to eu banks to bank crypto companies. I just wanna follow up with that because um the basil committee at the same time is limiting banks from holding Cryptocurrency as reserves. So how does this conflict with trying to make it more crypto friendly or easier for crypto companies to operate? Well, one day we will be operating in an economy, a truly digital economy where money is traveling on chain. And so if banks have to uh pay a capital charge just for holding digital money, then uh the committee may have gotten something wrong. So, uh it is an iterative process. Fossil committee is uh studying this very carefully and currently the uh the, the, the rules that they have proposed um are limited to their direct holdings and, and so that, that doesn't prevent banks from still uh interacting with crypto companies as custodians. Now, you're saying the US is going to fall behind uh the eu and other countries we're seeing now with the new Congress, a new subcommittee that's being formed, that's going to look at this and there's talk that stable coins are going to be the first to be regulated, but you think that this isn't going to be enough. It's too little, too late. Correct? Is that basically what your your overall thesis is here? I'm not saying it's too late. We still have a chance if we want to be the leading digital economy in the world, then we need rules of the road, not just for crypto but also for our private data. Remember, this is going to be a data driven economy. And so we also need to think about how can we ensure that these technologies will allow us to control our own data and respect our privacy. And these are some of the essential building blocks for a democratic digital economy. So a former member of the Federal Reserve Board of Governors, um You spent time most of your career in Washington. So yesterday, we spoke to Congressman Warren Davidson who had some criticism for us regulators. Let's have a quick listen. You've got people that are engaging in overt pumping dume scams and getting away with it over the years because the sec is asleep at the wheel or in a worst case scenario, coconspirators uh to launching things that they themselves say are unregistered securities. Uh So some seem to get a free pass and others seem to get their business models killed. What's the rhyme or reason behind it? And a lot of people say, you know what I got a business to run. I'm just launching it outside the United States. All right, the SCC is asleep at the wheel and launch your business outside the United States. What do you think? What is that, what the reaction will be in the US if it doesn't get its act together? Well, as someone who has worked at prior startups, it is a burden to uh meet with every regulator to explain that your product is in compliance. And so uh what would be helpful would be uh clarity to resolve the uncertainty? I think that was the worst part of it. Um going from regulator to regulator learning how our product uh is uh in fact in compliance and fully decentralized, but never knowing for sure um how they would land because uh there were uh no clear laws um in this space. So uh there are definitely pressures for companies to go overseas because it is uh fairly easy to um start a Blockchain. Um These chains can operate globally and so it's not necessary to be based in the US. All right, Linda, thank you for joining us for Policy Week. That was Crypto Council for Innovation, Chief Global Regulatory Officer, Linda Jane.

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