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DACOM Singapore 2024 focused on Singapore's leadership in shaping progressive regulation for secure crypto growth. The crypto industry's sentiment towards regulation continues to evolve. What was once viewed as a hindrance is increasingly embraced as a catalyst for innovation and maturity. A panel of industry experts recently convened to discuss this paradigm shift during a major industry conference featuring:
- Raks Sondhi: Chief Operating Officer, Upbit
- Roopa Sushil: Compliance Lead and MLRO, Anchorage Digital
- Priscilla Adams: Director of Compliance, Bullish
- Grace Chong: Head of Financial Regulatory (Singapore), Gibson, Dunn and Crutcher
- Moderated by Chen Arad, Chief External Affairs Officer and Co-Founder at Solidus Labs
The Path to Coherent Crypto Policies
Raks Sondhi, COO for Upbit Singapore, offered a nuanced perspective on the current state of crypto regulation. He acknowledges that crypto is a young asset class and achieving complete regulatory clarity will be a journey. However, he highlights positive developments such as Upbit's experience collaborating with regulators in various jurisdictions. This collaboration involves pre and post consultation paper discussions, which allow exchanges to provide feedback and understand the rationale behind upcoming regulations.
Sondhi emphasizes the importance of a two-way dialogue between regulators and industry participants. He used the Monetary Authority of Singapore’s (MAS) as a prime example where regulators are actively seeking industry input. This collaborative approach extends to international organizations like IOSCO and the Financial Action Task Force (FATF). Sondhi concludes by advocating for enforcement mechanisms for internationally recommended regulations like the travel rule. While enforcement might not be the most popular idea, Sondhi believes it is crucial for ensuring consistency and facilitating a healthy crypto ecosystem.
From Tech-Neutral to Tailored Crypto Frameworks
Roopa Sushil, from Anchorage Digital Singapore, acknowledges the ongoing need for regulatory clarity in the crypto space. She highlights three categories of jurisdictions: those taking a tech-neutral approach, applying existing regulations to crypto; those like Singapore and Hong Kong with dedicated crypto regulations; and those with no clear stance on crypto yet. While Sushil acknowledges progress, complete clarity is still a ways off.
Sushil emphasizes the benefits of clear regulations. As a custodian, she needs to know the rules to ensure safekeeping of assets and prevent investor harm. She commends Singapore's single-regulator approach and their collaborative efforts with industry players. However, Sushil points out the lack of clear regulations around Decentralized Finance (DeFi), a growing area within crypto. She anticipates progress on a DeFi framework in 2024 or 2025. Ultimately, Sushil believes clear regulations will foster responsible innovation and protect investors, while acknowledging that regulators cannot prevent bad investment decisions.
Industry and Regulatory Bodies in Synergy
Priscilla Adams, Group Compliance Director at Bullish, acknowledges that achieving complete regulatory clarity in crypto will be a journey. However, she sees positive signs of a maturing market. She highlights the increasing sophistication of regulations, moving beyond knee-jerk reactions to scandals and instead focusing on fostering innovation. This collaborative approach involves industry players like Bullish working with regulators to shape the future of the crypto space.
One key aspect of this collaboration is advocacy through industry associations. Adams highlights her work with the Hong Kong Fintech Association in responding to consultation papers and engaging with regulators. She emphasizes the importance of building relationships with regulators to influence the rule-making process. Looking ahead, Adams predicts regulations targeting Decentralized Finance (DeFi) within the next 24 months. She emphasizes the importance of strong compliance programs for DeFi players to navigate this evolving landscape. Overall, Adams believes 2024 is a pivotal year with the potential for significant progress in creating a framework for a vibrant and responsible crypto market.
Adapting to a Dual Focused Regulatory Environment
Grace Chong, a lawyer specializing in digital assets, acknowledges the challenges of achieving regulatory clarity in crypto. She observes a split in regulations between security tokens and cryptocurrencies. Security tokens tend to align more closely with existing regulations because regulators have greater comfort with this asset class. In contrast, DeFi (Decentralized Finance) presents unique challenges due to its inherent openness and lack of a central authority.
Chong highlights the difficulties firms face in navigating this evolving regulatory landscape. She outlines three categories of firms: those that proactively prepare for new regulations, those that react as regulations emerge, and those that avoid regulated markets altogether. She emphasizes the importance of understanding the underlying philosophy of regulators when crafting compliance strategies. This necessitates looking beyond the surface of consultation papers and understanding how regulators traditionally approach similar issues in established financial markets.
Conclusion
The panel discussion at DACOM Singapore 2024 concluded with a sense of cautious optimism. While challenges remain, the collaborative efforts between industry and regulators offer a promising path towards a coherent regulatory framework for the crypto space. For the full replay of this panel discussion, and to explore content from other DACOM Singapore 2024 panels, be sure to visit here
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