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There are over 2000 different currencies right now, each with its own unique characteristics, uses and communities, while there are masses of different blockchains, platforms and exchanges – each of which responds to competing needs and values. On the one hand, this profusion is one of the driving forces of innovation in the cryptographic sphere. On the other hand, it can be said to act as a block against widespread adoption, as the lack of unified standards means that some morally dubious efforts give the rest a bad name.
Last year saw an intensifying drive towards the production of international standards for the cryptocurrency industry. Groups such as Global Digital Finance have grown with the goal of promoting universal standards on how cryptographic platforms are managed, as groups such as Blockchain Association and CryptoUK are now focused primarily on national standards. These organizations count Coinbase, Bitstamp, Circle and others as members, although they often have less than a year.
However, while maintaining the promise that encryption will avoid strict government regulation by learning to regulate, there is also a concern that global standards may hinder innovation and that the crypt – almost by nature – should not be standardized.
Global digital finance
Like Teana Baker-Taylor, the executive director of Global digital finance (GDF), he told Cointelegraph, the London-based association aims to "show that self-governance and best practice guidance are crucial for consumers in the industry and their confidence in cryptographic resources. the sector continues to mature and in accordance with the regulation developments. "
In other words, GDF is trying to develop voluntary guidelines and codes of conduct for exchanges, token sales, wallet providers, cryptocurrencies and rating sites, and while it was launched only in March, it already has a large list of members.
At the end of October, the payment company Circle (and owner of Poloniex) joined it as a founding member, adding to a list that includes Coinbase, R3, ConsenSys and Diginex. Meanwhile, Baker-Taylor states that the association has also begun to dialogue with legislators and public institutions.
"With over 250 people and companies, global regulators and policymakers have paid attention to the GDF Code and community engagement, and this is an important start." Understandably, many regulators' signal has been mixed, but the most of which we are committed supports the maintenance of an open dialogue to ensure that they do not stifle this important innovation ".
However, GDF is not just working on codes of conduct for token sales and crypto-exchanges. They are also involved in the elaboration of a taxonomy of cryptocurrencies, which tries to divide the currencies into three types: payment tokens, tokens of financial resources and tokens of consumers.
Given that there is much confusion and conflict between world governments on how to define cryptography, this attempt to produce a clear taxonomy of cryptocurrencies is very necessary. However, as these organizations remain largely adverse to the classification of cryptocurrencies as money and / or assets, there remains concern that taxonomy (and codes) of GDF may simply be ignored by governments and regulators.
Governments
Despite possible opposition or resistance from governments, groups such as the GDF could have emerged precisely because of the government's growing interest in encryption. However, their emergence at the moment presents a golden opportunity for the world to be involved in the formation of government policy.
In October, the Task force Financial Action (FATF) – an intergovernmental group set up by the G7 to combat money laundering – has adopted a series of changes to its standards regarding the regulation of virtual resources. And encouraging for the crypto industry, these new recommendations have focused in particular on the prevention of money laundering and terrorist financing, leaving plenty of freedom for exchanges, tokens and crypto-services to operate in accordance with the needs of their users and their own logic. He said in his recommendations since October:
"The FATF Recommendations require monitoring or supervision only for AML / CFT purposes [Anti-Money Laundering/Countering Financing of Terrorism]and do not imply that virtual asset service providers are (or should be) subject to the stability or protection of consumers / investors, nor imply any kind of protection for consumers or investors. "
In short, FATF sees no reason to do anything about the volatility or decentralization of cryptocurrency, which implies that it wants to leave much of the decentralized nature of intact cryptography. That said, other government groups want to do more than simply prevent the crypt from being used for crimes or terrorism.
For example, Felix Hufeld – the president of the German Federal Financial Supervisory Authority (BaFin) – said in October that the global community must produce international standards that regulate the management of ICOs:
"The number (of ICO) and the volume (of money) for ICO are both increasing, investors have rights mostly minimal".
However, while this may foreshadow a push for intergovernmental standards that dictate what ICOs may or may not do, such moves remain at a very preliminary stage. And since governments have been slow to act here, this provides an empty space for groups like GDF – or the newly formed Blockchain for Europe association (which includes Ripple and the NEM Foundation as members) – could advantageously fill the wider industry encryption .
National initials, international finals
And as governments and global government bodies wake up slowly to the idea of regulating cryptocurrencies globally, the crypto industry is increasingly producing new commercial institutions that are beating them when it comes to developing standards. .
In March, CryptoUK was established with the goal of producing self-regulatory standards for the UK cryptocurrency industry. But its president, Iqbal V. Gandham, tells Cointelegraph, it's also an appetite for CryptoUK for international coordination.
"The attention of CryptoUK since our launch at the beginning of this year has occurred in the UK – ensuring proportionate regulation is our priority, but we support collaboration on regulatory approaches at international level, in particular learning lessons – both positive and negative – from other jurisdictions ".
Given that most other self-regulated commercial entities – such as the Blockchain Association, the Japan Currency Exchange Association and the Blockchain Foundation of India – are working primarily at the national level, global collaboration on regulatory approaches will be crucial if the cryptological industry is to enjoy uniform international standards.
And increasingly, there seems to be an increasing availability among the encrypted companies to collaborate with each other on the development of (international) standards. In August, the Gemini, Bitstamp, Bittrex and bitFlyer exchanges announced the formation of the Virtual Commodity Association working group. And like Global Digital Finance, its goal is to develop global industrial standards on how cryptochange are managed and cryptocurrencies are exchanged.
Are the standards equivalent to less innovation?
There is, therefore, every reason to believe that the crypto industry, sooner or later, will develop international standards and will adopt them on a large scale. But the question remains: will these standards simply give the public more confidence in cryptography, or will they also have the unfortunate side effect of limiting innovation?
"In many industries, regulation and standards are seen as suffocating innovation, but in the crypto-asset market, regulatory and legal ambiguity poses challenges for growth." Clarity around the "road rules" will allow innovators to better access new ways to access global capital and to support nascent nascent business models with greater confidence. "
– Teana Baker-Taylor, executive director of Global Digital Finance
Likewise, there is the risk that the standards can put compliant companies at a disadvantage compared to those companies or cryptocurrencies that simply (and perhaps illegally) spread them. Given that the decentralized nature of cryptocurrency offers people and groups more opportunities to ignore centralized authority, this is a real danger.
However, once international standards are established and recognized, it becomes much more likely that the companies that observe them have more chances to work with and influence regulators, which will eventually lead them to a competitive advantage. And as Teana Baker-Taylor concludes, there is a strong appetite among the companies scrambled to promote and follow strong universal standards.
"The GDF community is made up of hundreds of individuals and companies from around the world who share the vision to grow a mature, stable, transparent and fair industry.The desire and commitment of the community to instill and driving solid business practices is hugely compelling and in our experience, it is much more widespread than those that do not attribute to this mentality ".
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