2022 will certainly be a memorable year for the digital assets industry. John Ray III, newly appointed FTX CEO and American attorney who specializes in recovering funds from failed corporations, even proclaimed that in his career he'd never seen "such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here." 2022 has established the upcoming years as a rebuilding stage for the digital asset space and has proven a desperate need for increased regulatory clarity and accountability for bad actors. 2023 is a crucial year for institutions to regain consumer trust and adapt to the new era of digital assets.
The call for regulation has heightened in the last months over the FTX crash and the need to safeguard consumers is more prominent than ever. As institutions reflect on the past year, they will need to consider concrete consumer solutions. Accountability and regulation will need to be the focus for institutions to build back user trust, and it must be sophisticated and robust enough without harming innovation. These institutions will need to provide credible business models and real use cases – hype will no longer be good enough to influence consumers on what and whom they choose to trust.
Because of recent failures, there is huge pressure on regulation. With this pressure, there is the possibility to over-regulate which brings its own dangers and should be closely monitored to ensure balance.
Policymakers around the world will need to reflect on their current regulation standards as the FTX crash has changed the way consumers trust. The government of Gibraltar has always approached the digital assets sector with a progressive attitude and is a leading jurisdiction in the space. In 2018 Gibraltar became the first jurisdiction in the world to provide a purpose-built regulatory framework for businesses that use blockchain or distributed ledger technology, allowing firms to operate in or from the jurisdiction without concerns.
Global regulators and lawmakers could seek to regulate in the style of Gibraltar, with a 'right touch, not light touch' regime. The jurisdictions regime, coupled with the 10 core principles, including corporate governance requirements, segregation of client assets and more recently setting the standards for market integrity, makes Gibraltar a robust and dynamic regulatory choice. Gibraltar is committed to serving consumers in the industry and adapting to this new era of digital assets.
As policymakers adjust and improve regulatory standards, the adoption of De-Fi will accelerate. Prominent issues that are currently affecting De-Fi, such as regulatory compliance, scalability and hack/threat vulnerabilities will decrease as the standards in the space change. There is huge potential for De-Fi to be a powerful part of the financial ecosystem, how and when it overcomes harsh issues.
Digital Assets are certainly transforming the world and are becoming more and more notable in the financial ecosystem. 2023 marks a very important year in the digital asset space after the whirlwind in 2022. As the diversity of asset types increases and the number of consumers, regulators will need to be transparent and vigorous in order to keep up with the ever-changing sector.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
