Bitcoin, Ethereum & Co: End the Lack of Transparency, Says Fed Powell

© Reuters. – With the global triumph of blockchain technology, calls for proper regulation are growing louder. While this sector was still being laughed at a few years ago, it reached last fall, with a market capitalization of $3 trillion, a volume that gives regulators wrinkles of worry. Ultimately, the growing involvement with established financial markets not only increases the popularity and areas of application, but also the dangers to the financial system.

The International Monetary Fund (IMF) recently called on major regulators to agree on a common regulatory framework. Only in this way will it finally be possible to take into account the decentralized nature of the sector, because otherwise there would be too many loopholes.

Fed Chairman Jerome Powell spoke yesterday at an event organized by the French central bank on the “opportunities and challenges of the tokenization of finance”. He is convinced that the current slump in the cryptocurrency market will not prevent individuals from increasingly using decentralized finance (DeFi) services in the future.

“We need to be very careful about how crypto-activities are conducted within the regulatory framework, wherever they take place. […] there is a great need for more appropriate regulation”.

Officials have yet to provide an adequate answer to the question of what such regulation might look like. In the context of the DeFi ecosystem, Powell himself refers to the “big structural issues related to the lack of transparency”.

Bank for International Settlements (BIS) President Agustín Carstens noted that central banks and regulators need to bring order to an industry that is globally interconnected and borderless.

All stakeholders agree that regulation must take place. But perplexity over its implementation will mean that more years will pass before a single regulatory framework is put in place. Meanwhile, the crypto industry is changing rapidly, so the day the laws are passed, they are already obsolete.

The crypto community should appreciate that authorities always lag behind developments. Because the initial idea behind the blockchain was that users escape the influence of banks and regulatory authorities.

By Marco Oehrl

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