On this episode of FRT, the IIF’s Conan French and Dennis Ferenzy discuss their recent paper, Crypto Course Correction,  exploring how the tumultuous events of 2018 have set crypto asset, blockchain and distributed ledger technologies on a more mainstream trajectory.  Ten years after Bitcoin made its debut, regulatory actions and the crypto asset price collapse have shifted the center of gravity toward the traditional companies and official sector institutions with the resources to continue supporting crypto application development. 

Governments and financial regulators have also started addressing missuse of crypto applications in financial crime, Initial Coin Offerings (ICOs) skirting securities law, and market manipulation. At the peak of the crypto asset bubble they even started assessing systemic risk.  In the ensuing months, regulatory guidance has steadily emerged with consistent focal points across countries and regions:

• Ensuring that consumer protection provisions are followed.  
• Extending KYC and AML requirements to crypto currency exchanges, wallet operators, and other service providers.
• Highlighting that securities regulation is applicable to many crypto assets and services while recognizing that crypto assets might have functionality that makes it hard to fit into existing legal and regulatory frameworks. 

At the same time,  well-informed establishment voices cautioned against dismissing the technology. In congressional testimony this past fall, the head of the Commodity Futures Trading Commission (CFTC), Chris Giancarlo, said, “regulators owe it to the new generation not to dismiss cryptocurrencies” and “I personally think that cryptocurrencies are here to stay.” IMF head Christine Lagarde echoed similar sentiments in a speech made in Singapore in November, where she argued that governments around the world should investigate crypto further because of its potential.

This podcast reviews the forces reshaping the industry as well as future drivers for the technology by a generation and institutions in search of solutions with greater efficiencies and more individual control.