Late last month, EU lawmakers and regulators agreed to step lightly when it comes to regulating blockchain technology. Officials say they will “softly approach” regulation, thereby allowing innovation aimed at disrupting legacy financial solutions to continue. The EU’s move mirrors that of Britain’s Financial Conduct Authority (FCA), which has permitted banks and fintech companies to test new technologies with consumers before advancing regulatory policy. Like Britain’s FCA, the EU will of course eventually start drafting laws and regulations for blockchain technology. Institutions must remain engaged to help set the tone with regulators before the innovation window closes and regulatory policies are drafted.
Taking a page from the EU playbook, last week former CFTC commissioner Bart Chilton urged President Obama to “heed the call” and embrace blockchain and bitcoin innovations or risk the U.S. losing its competitive edge.
So what does this all mean? Here are two key takeaways:
(1) The removal of regulatory uncertainty – In many cases, uncertainty or fear of the regulatory unknown can stifle innovation more than regulations themselves. Removing uncertainty will encourage financial institutions and other players on the sideline to get involved.
(2) Regulatory-friendly competition among jurisdictions – It may be difficult to imagine, but countries are beginning to compete with each other over whose jurisdiction is more accepting of bitcoin and blockchain technology. Stay tuned…