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Tracking developments in digital asset regulation

As the world of digital assets continues to evolve, so too does the regulatory landscape surrounding them. In recent years, we've seen a significant increase in regulatory focus on digital assets, and this trend is only set to continue.

The rapid growth in retail and institutional adoption of digital assets, coupled with a significant rise in market capitalization and extreme volatility, has brought the issue of regulation to the forefront. This is particularly true in light of a number of high-profile crypto firm failures (including the recent collapse of the FTX exchange), fraud, scams, and mismanagement of customer funds, which have resulted in a loss of consumer trust.

Regulators around the world are now working to address these issues by developing a rapid and comprehensive global regulatory policy approach and supervisory framework that will help ensure enhanced consumer protection. As the digital asset class becomes more interconnected with the traditional financial ecosystem, it is increasingly impacting financial stability. This is particularly true given the pace of innovation and lack of focus on risk management in the digital asset space.

To address these concerns, global standard-setters are pushing forward with international cooperation. Many local authorities have publicly announced their plans to become global hubs for digital assets, technology, and innovation. For example, the European Union is in the advanced stages of finalising the Markets in Crypto-Assets Regulation, while authorities in the United Arab Emirates are setting up the world's first authority solely focused on virtual assets. Switzerland, meanwhile, has integrated one of the most mature regulatory frameworks for digital assets, allowing market participants to gain certainty on the legal and regulatory treatment of their projects and intended activities.

However, despite the efforts of regulators around the world, the regulatory landscape for digital assets remains heavily fragmented. A significant number of countries are researching, defining, consulting, negotiating and legislating in order to bring digital assets under the existing financial services frameworks, but the speed of action, approaches adopted, services and products covered, and even the definitions and terminology used, all vary greatly.

Despite these challenges, the direction of travel is clear. Firms involved in digital assets must be prepared for higher standards than those in place today. The bar is rising to bring digital asset firms in line with traditional financial services obligations, and for consumers, firms, and other stakeholders, this change could not happen soon enough.

How can Surety help?

Tracking and managing the compliance obligations associated with changes in digital asset regulations can be complex, given global fragmentation. The regulators in each jurisdiction expect documented, tested and evidenced controls to be in place for their emerging regulations, ensuring the risks associated with your business are understood and managed effectively. Compliance staff at regulated firms are often swamped with policies and procedures, risk reporting, horizon scanning, as well as the business data and management information required to do their jobs.

Surety simplifies this by becoming your central compliance brain. Our platform gives you the ability to align and assign your controls to the regulations that apply to you, and easily evidence that fact to your regulators! Spot your regulatory overlaps and underlaps across jurisdictions, report to stakeholders and drive forward change projects by being fully informed.

When implementing regulatory change projects or assessing your impacts or exposures from new/changing regulation, Surety gives you the evidence and the insights to succeed.

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