The blockchain/crypto week in quotes

“Blockchain is a real technology – it’s just a database we can all access that’s kept up-to-date.” Jamie Dimon, JPMorgan CEO

“It is difficult to ignore the huge amount that investors, including some of the most sophisticated global investors, have poured into digital currencies in recent years. The invention itself is a tremendous demonstration of genius and creativity, and it deserves an opportunity to find a sustainable future in our economy. We would argue that two key ingredients to establishing a practical utility and a more stable value are governance and regulatory clarity – both of which are antithetical to the original intent as a decentralised, ungovernable global currency. And yet, as with exchanges, transparency and fairness are the keys to trust, and without some level of oversight and regulation, it is not possible to demonstrate a level of transparency and fairness that will build trust.

At Nasdaq, we are working to help cryptocurrencies gain investors’ trust by offering our technology for trade matching, clearing, and trade integrity to startup exchanges. We have also invested in ErisX, an institutional marketplace for cryptocurrency spot and futures. While this year will be another proving ground for cryptocurrencies, we believe digital currencies will have a role in the future. The extent of its impact will depend on the evolution of regulation and broader institutional adoption.” Adena Friedman, President and CEO, Nasdaq

“The increasing number of financial entities under supervision, the rapid development of new products, the evolving regulatory environment and the tightening of the labour market have put the Malta Financial Services Authority under considerable strain.” IMF

“The emerging cryptoasset market is seeking regulatory clarity and the FCA’s proposals are an important first step. The categorisation of different types of cryptoassets, the definitions applied and the examples given all help address ambiguity in this emerging area. 

It is clear the FCA is looking to move fast, with final guidance expected in the summer.  This is understandable as there have been challenges and the paper highlights the potential harms associated with cryptoassets. However, there are also a lot of positives. In particular, tokenisation is set to grow and the UK has an opportunity to play a pivotal role here. Some questions remain unanswered, including whether certain unregulated cryptoassets should be brought under the FCA’s jurisdiction to further protect consumers, and whether the existing regulatory framework is appropriate given the unique features and risks associated with these products. 

ESMA has recently suggested some aspects of relevant EU legislation may require amendments to reflect this. The regulator’s plans should help to reduce the perceived reputational risks for issuers and firms involved in the cryptoasset market, allowing those who wish to move into this space to do so more confidently.” Steve Davies, PwC’s blockchain leader

“Lack of regulation in the cryptocurrency industry is a hindrance to innovation and the growth of legitimate business. Blockchain and cryptocurrencies have enormous potential to transform the financial world but, without supportive regulation, the space will likely struggle to gain credibility. Until such time when governments, regulatory bodies, and traditional industry actors fully embrace and support the cryptocurrency industry through regulation, investors should look for fully compliant crypto projects, which advocate for sustainable regulation, when seeking to enter into this new digital economy.” Frank Wagner, CEO and Co-founder, INVAO

“Simple calculations suggest that once block rewards are zero, it could take months before a Bitcoin payment is final, unless new technologies are deployed to speed up payment finality. Second-layer solutions such as the Lightning Network might help, but the only fundamental remedy would be to depart from proof-of-work, which would probably require some form of social coordination or institutionalisation.” The Bank for International Settlement (BIS)

“The suggestion that the global blockchain ecosystem isn’t ready for regulation doesn’t take into consideration the significant strides that have been made on the regulatory front over the last 12 months, and the impetus for such advances. The benefits of adopting the right regulatory approach continue to be showcased here in Gibraltar, where the technology’s ascent in our economy has been accelerated since the implementation of the world’s first purpose built DLT regulatory framework. Regulation, informed by the needs of industry, is the key to unlocking the boundless potential of blockchain technology, as a mechanism to improve business operations and the daily lives of citizens.” Nick Cowan, Managing Director and Founder, Gibraltar Stock Exchange Group

“I’m not so worried about cryptocurrencies. They fail the basic tests of financial services. They’re not a great unit of exchange, they don’t hold value, and they’re slower.” Huw van Steenis, adviser to Bank of England Governor Mark Carney

“Even in extreme scenarios such as a recession or financial crises, there are more liquid and less-complicated instruments for transacting, investing and hedging (than crypto and blockchain).” JPMorgan analysts

“Despite its small market size, cryptocurrency regulation at this early stage is constructive to laying the foundation for a robust digital economy. As opposed to FX or capital markets where the assets and the infrastructure are separate, crypto markets and the blockchain technology it rides upon are inextricably linked. It is for this reason that regulation at the early stages is necessary — it guides not only the market construction, but helps to order the infrastructure as well.” Nydia Zhang, Chairman and Co-founder, Social Alpha Foundation