Davos 2023: Cryptocurrency regulation needed to address money laundering, financial crimes, WEF told
- Regulators need to be careful to avoid legitimising ‘purely speculative’ activity in their rush to regulate the industry, according to Monetary Authority of Singapore chairman
- ‘Utmost priority’ to regulate cryptocurrency industry, but calls for a ban are ‘a bit exaggerated’, said Bank of France governor François Villeroy de Galhau
“Beyond that, if you have to think about regulating cryptocurrency, the same way we regulate banks, insurance companies for prudential reasons, for financial stability reasons, I think we have to take a step back and ask the basic philosophical question: does that legitimise something that is inherently purely speculative and, in fact, slightly crazy?
“Or are we better off providing ultra clarity to what’s an unregulated market and if you go in, you go in with your own risk? I lean more to the latter view.”
FTX, one of the world’s highest profile cryptocurrency exchanges, collapsed into bankruptcy in November and its founder Sam Bankman-Fried is facing criminal fraud charges in the United States.
Bitcoin, the most well-known digital currency, was changing hands for US$21,200.71 in midmorning trading in London on Wednesday, a 33 per cent increase over its October 29 low last year.
François Villeroy de Galhau, the Bank of France governor, said it is of the “utmost priority” that regulators put rules in place for cryptocurrency companies and other non-bank financial firms, but calls for a total ban on cryptocurrency are “a bit exaggerated”.
“It’s not a question [of whether] we have to regulate or not. For sure, we have to regulate. We cannot say look there was this cryptocurrency winter and now it’s over,” Villeroy said. “We have to regulate in a coordinated manner. We have to have international rules.”
Colm Kelleher, the UBS chairman, said the blockchain technology behind cryptocurrency is “unstoppable” in terms of how it can help reduce costs and operational friction.
However, “know your customer” and anti-money-laundering rules need to be put in place or “you cannot justify selling that product as it is currently constituted”, he said.
“We did have investors who wanted to invest in coinage and we had to draw a line on what was suitable for those investors, what is our fiduciary duty and what are our compliance responsibilities,” Kelleher said.
“We have not answered those kinds of things and, in many ways, we dodged a bullet because this thing blew up quickly. It will come back in one way or another and we are looking for the regulatory framework that will allow us to accommodate that for our clients.”