Industry players talk about crypto regulation in 2023

So far, 2023 has been a seismic year for crypto. In the new year, a difficult bear market came to an end, and in February there has been an onslaught of moves by global regulators.

Just today there were rumors that Gary Gensler’s SEC had decided to categorize all digital assets other than Bitcoin as securities.

In the wake of the news, industry players gathered at London’s annual Blockchain Economy Summit to discuss what’s next for crypto.

At the heart of regulatory conversations is the idea that exchanges must work hand-in-hand with regulators to protect innovation. This means four things: Communication, stabilization of markets, increased transparency and better security.

Exchanges need transparency

Delphine Forma – Senior Compliance Manager at the BitMEX exchange – explained CEX’s need to open up transparency to users to help manage risks.

“Transparency is a big topic, especially after FTX – there’s a big discussion around Proof of Reserve – we need to show what’s going on inside and be more transparent about everything we do,” Forma said.

“We do what we can in compliance, through our coin listings we strive to ensure a good product, but we need a good customer.

“[And this means] customer education – teach users how to protect themselves”.

Michelle Maiuri – Marketing & Growth Director at Deepcoin Exchange – agreed. She adds that she expects customer education to be at the center of progress in 2023.

“[2023 will be] all about education and regulation,” claimed Mairuri.

“If we put twice as much into educating users, how many would have suffered in Terra or FTX? We have to double down on education”.

Communication is the key to regulation

This is reflected in conversations with regulators according to Delphine when she explained how BitMEX works to improve government relations.

“Education is a particularly big thing with regulators,” Delphine explained.

“Crypto was born digitally and globally, but [is forced to face] local regulations”.

“The user onboarding process is becoming increasingly complex across different regulatory environments – regulators around the world are not talking enough to each other”.

Peter Stilwell – Coinbase’s head of business development EMEA – claimed that things are improving with regulators on this front.

“[Coinbase] worked with a lot of regulators, and they don’t necessarily want to say no right away,” Stilwell said.

“In Europe [especially] in the Netherlands, Spain, France and Great Britain – [regulators] are very curious about what the technology can offer.

“What I want from them is for them to be engaged in what we’re working on rather than pursuing regulation by enforcement.”

Regulators need to understand crypto from a user perspective

This sentiment was shared by Daniel Antcliff – Head of Business Development and Operations at Gate.io. When asked how exchanges can work better with regulators, he explained that communication was critical.

“[Regulators need] Communication, understanding and participation with crypto firms – Communication in particular,” highlighted Antcliff.

“Regulators need to understand [crypto] from a user and CEX perspective – to understand the work and due diligence done on Exchanges for third party listings.

“Communication needs to be more open with government so they don’t stifle innovation with too much red tape so we can keep moving forward [as an industry]”.

And much needed communication is something that is getting better according to Peter Stilwell. In recent experiences participating in a regulatory sandbox, Coinbase found great success in working closely with regulators.

“I was part of FCA [ UK Financial Conduct Authority] sandbox for innovation – it was a great place to innovate with live users in front of the regulator’s eyes,” he explained.

“The Regulatory Sandbox makes the fast track to an FCA license meaningful going forward.”