Davos 2020 was the annual meeting of the global financial elite. While most of the headlines from the January conference focused on the urgency of the climate emergency the world now faces, there was one announcement that will change the cryptocurrency industry forever.
In a press release to mark the beginning of the two-day congress, financial leaders at the World Economic Forum (WEF) launched their Global Consortium for Digital Currency Governance (DCG).
It is difficult to conceive of a more important piece of news.
At the head of this group of financial heavyweights is the founder of the World Economic Forum himself: Klaus Schwab. The German economist will lead some of the most powerful and influential financial minds on earth: from central bankers to think tank chiefs, academics to tech industry leaders.
Together this group aims to consolidate cryptocurrency’s fragmented regulatory system and create global standards that every country in the world can follow.
“Digital currencies are often cited as a tool for financial inclusion, but this opportunity can be realised only when paired with good governance,” the WEF said.
“Efficiency, speed, interoperability, inclusivity and transparency will be at the heart of this initiative,” it noted.
“It will call for innovative regulatory approaches to achieve these goals and build trust.”
Since its birth over a decade ago, cryptocurrency has challenged the financial mainstream and disrupted hundreds of years of state-level monetary policy.
It has been left to individual countries to slowly piece together their own cryptocurrency rules as they try to squeeze this technology into their existing financial regulatory structures. Most of the time, cryptocurrency is a square peg being hammered into a round hole.
The achingly slow movement of individual regulators means business owners have a dizzying array of slightly differing laws and rules which they must attempt to follow.
No globally-ambitious company can be expected to grow effectively when faced with a landscape like this.
And yet cryptocurrency businesses are simply expected to grapple with this vast web of often contradictory legislation. No-one is immune. The world’s largest cryptoexchange by volume, Binance, has struggled to abide by ever-changing American legislation. In June 2019 it began to restrict US customer access to its services, and was forced to create a separate entity called Binance US in order to onboard American users.
When the service opened for deposits and registrations in September 2019, users in 13 states were excluded, for regulatory reasons, of course.
The growth of the space and the much-needed advancements it offers: in household finance, for payments, in improving B2B contracts and relationships, to investing and wealth, have been severely hampered by the gaping lack of cross-border, cross-governmental regulation.
While blockchain technology has not been afforded the same respect as other technological advancements of the past decade, that is beginning to change.
This is true even among super-cautious and conservative global bodies like the Basel Committee. This group of 45 leading central bankers, whose remit involves maintaining global stability, has kept cryptoassets at arms length over the past 10 years, while noting their rapid and disruptive rise.
But we appear to have reached a tipping point where policymakers can no longer kick the can down the road: cryptoassets can no longer be dismissed or ignored. The Basel Committee’s discussion paper — which runs from December 2019 to March 2020 and is investigated at length by Copper here — suggests that cross-border and cross-sector regulation is required for managing bank exposure to cryptoassets.
The same is true for the WEF. In 2018, Klaus Schwab wrote that “Blockchains are at the heart of the Fourth Industrial Revolution.”
It would not be controversial to say that the revolutionary technology now sits on the same level as world-changing advancements in artificial intelligence and mobile supercomputing.
We will see the fruits of this shift when the WEF brings together its chief policymakers at the inaugural Global Technology Governance Summit in San Francisco on 21-22 April 2020.
The six main pillars of discussion that these global leaders will consider are:
From Artificial Intelligence to Quantum Computing
From Autonomous Vehicles to Drones
From Big Data to the Internet of Things (IoT)
From Blockchain to Digital/Crypto Currencies
From Cybersecurity to Data Privacy
From Gene Editing to Synthetic Biology
Introducing the agenda for the summit, the WEF writes: “The world is experiencing the Fourth Industrial Revolution, in which data has arguably become the world’s most valuable resource In this context, technologies such as artificial intelligence, blockchain, drones, gene editing and the internet of things could lift communities out of poverty, cure diseases and restore balance to our oceans and natural ecosystems.”
The rise of the stablecoin, most prominently and most recently in Facebook’s controversial Libra project has given mainstream economists the permission to view cryptocurrencies in a new light.
The man tasked with bringing Libra to fruition is David Marcus, stepping down from the Coinbase board of directors to head up Facebook’s Calibra division.
Calibra is the digital wallet which will allow Facebook’s 2 billion users to move Libra across borders.
Marcus was quoted alongside the likes outgoing Bank of England governor Mark Carney and the heads of the Bahrain, Kenyan and South African central banks in the DGC release.
He said: “We agree that good regulation is important for the success and safe adoption of digital currency platforms and are looking forward to continue to engage in this constructive conversation.”
That conversation begins in earnest now.
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