Investing.com – In 2022, public policy relating to digital assets saw a series of major changes in the United States, the United Kingdom and the European Union (EU). Far from being banned, digital assets are being integrated into regulatory and legislative frameworks in different parts of the world. Now that the scale of digital assets is too large to ignore, governments in these regions are closing in on the positions of countries such as Switzerland and Singapore. This gives us a basis to properly develop the different groups of digital assets thanks to the clear legal and regulatory framework established years ago.
Benjamin Dean, head of digital assets at WisdomTree, analyzes this sector. “The digital asset ecosystem is no longer the Wild West it used to be. many technologies that are integrating into our daily lives. Using these networks will become as commonplace as using a Global Positioning System (GPS) to navigate a city you’ve never been before.”
An essential scale
In November 2021, the digital asset ecosystem surpassed $3 trillion in market capitalization, a record high. “The benefits this new technology brings, such as greater speed, accessibility and transparency, are becoming too great to ignore. At the same time, the potential risks – including those related to cybersecurity and criminal activity – are now well-known,” notes Dean.
In March, the Biden administration announced the “Responsible Development of Digital Assets Executive Order,” an official document that clearly outlines the potential benefits and risks of digital assets and directs various federal agencies to investigate and provide recommendations on how the US can continue to be “a market leader in digital assets”. The United States can continue to be “a global leader in the growth and development of digital assets and related innovations,” as well as “defend against certain key risks that require evolution and alignment of the U.S. government’s approach in terms of digital assets”.
Not wanting to be left behind, the UK Treasury has announced plans to make the country the “world center for cryptocurrencies”. Although details are scarce, early initiatives include “legislation for an ‘isolated financial market infrastructure environment’ to help businesses innovate, a two-day ‘CryptoSprint’ event run by the Financial Conduct Authority ( FCA) in May 2022, work with the Royal Mint on a non-fungible token (NFT), and an engagement group to work more closely with the industry.”
Finally, the Crypto Asset Markets (MiCA) proposal is making its way through various European Parliament working groups. Although the current wording of this proposal is constantly evolving, if it continues to progress it will eventually be considered by Parliament, the European Commission and the European Council so that the EU can have a unified framework for the regulation of digital assets.
Governments approach new technologies in different ways
“The internet, the last great wave of technology, is still playing its part. Data protection and privacy, considered a facet of internet governance, are treated very differently in the United States in the absence of any federal digital privacy legislation, which contrasts with the European Union and its General Data Protection Regulation and Directive (GDPR).This did not happen overnight; and implementing GDPR took decades,” Dean explains.
“Another example might be how speech is regulated online. Section 230 of the US Communications Decency Act has provided online service providers with a safe harbor for liability related to the conduct of their users on the platforms. In contrast, the EU Digital Services Act is a relatively recent initiative that will take shape in the EU in 2024, some thirty years after the appearance of the commercial internet”, adds he.
The digital asset industry can have many hotbeds.
A recurring question for many years is: “What happens if governments ban digital assets?”.
“It turns out that there are many governments, but none of them choose how new technologies will be used on a global scale. This is particularly the case with free software in an Internet-connected world. Far from banning digital assets, many governments are now competing to accommodate companies that use this technology.Governments that strike the right balance in terms of regulatory measures will be able to take advantage of a new wave of technological change, including the jobs, tax revenues and welfare that these changes bring,” concludes Benjamin Dean.