“The current [regulatory] frameworks have muddied the water,” claims the one of the world’s leading blockchain player, Ripple. While the Brad Garlinghouse-led firm believes that policymakers have made commendable efforts in the digital assets and blockchain space, there is a lack of understanding in terms of the fact that there is a need for ‘a clear and consistent language and regulatory approach.’
In a recent release titled, ‘U.K. Financial Conduct Authority Provides a Role Model for Digital Asset Regulation’ on Ripple Insights, the firm commended the FCA’s attempts to classify digital assets and provide companies with some sort of clarity on whether they will need to be regulated and how to become compliant by categorizing digital assets into exchange, utility and security. Authored by Ripple’s Global Head of Government Relations, Michelle Bond, Ripple’s latest post read,
“Businesses need this clarity on classification. As they work to build solutions for a particular region, it is essential that they understand the boundaries of what is permissible. Similarly, governments require clear guidelines in order to recruit new companies and promote emerging technologies that can lead to job gains and tax revenues.”
While enabling innovation to unfold, Ripple believes that FCA guidelines can play a pivotal role in protecting consumers.
The post also cited the example of the ‘evolution of early Internet regulation,’ which was previously governed by a framework originally written for transistor radios and rotary phones and the subsequent release of ‘The Framework for Global Electronic Commerce,’ after realizing the need for a separate set of principles to accelerate the growth of global commerce over the web.
The firm stated that concerned institutions need to recognize the differences between technologies, instead of enforcing the same set of regulations on different industries. The post read,
“Countries that take the lead on these frameworks will be better positioned to attract capital, companies and jobs – particularly since blockchain technology is here to stay.”
Stating that other regulatory bodies of other countries can take cues from the recently released FCA guidelines, the Ripple exec added,
“..digital assets and blockchain need well-defined rules that should be consistent enough with one another such that companies can operate globally without fear.”
Financial players losing out
Bond went on to state that financial players and companies have continued to rely on “outdated laws and rules” due to the uncertain regulatory climate. In the payments sector, transactions are inefficient and take days to complete. According to Bond, RippleNet seems to address these inefficiencies of the legacy institutions, while providing transparency and eliminating the need for pre-funded accounts, a subject that has was highlighted by Breanne Madigan, Ripple’s Head of Global Institutional Markets, at the OECD Global Blockchain Policy Forum in 2019.
Rather than replacing fiat currency, Ripple claims that it seeks to leverage digital assets to solve the significant problem of trapped capital and pre-funding in the traditional banking system by positioning RippleNet as a backbone of the cross-border payments realm.