 Good morning, good afternoon, good evening, everyone. It is such a pleasure to welcome you to the launch of our paper, Navigating Cryptocurrency Regulation, an industry perspective on the insights and tools needed to shape balanced crypto regulation. This is a paper being put forth promulgated by the World Economic Forum's first ever Global Future Council on Cryptocurrencies. I'm extremely proud of this particular council, which is the first of its kind here at the forum and really reflects a multitude of stakeholder perspectives, both from a global perspective from different countries, but also from different protocols. And that's pretty unusual in this space, which tends to be quite opinionated and factionalized. But what we noticed in the course of conversation among council members was that there was a strong sense that there was a need to provide a more balanced perspective from across the industry of what would actually help in the regulatory environment, what would actually help both spur innovation and adoption in positive ways, but also help mitigate risk. So the fun of the prompts of the paper is that regulation is not only inevitable, it's actually beneficial if it's done in a balanced and nuanced way. To kick off the conversation, it's my great pleasure to introduce Denelle Dixon. She is the CEO of Stell Development Foundation, one of the core authors of this paper. Stellar, for those who may not be familiar, is a foundation that works to focus on unlocking the world's economic potential. Before joining Stellar, Denelle is the CEO of Mozilla, and she is a lawyer just like me and close to my heart. Denelle, I'll hand it over to you. Thank you, Sheila. That's great. I'm so happy to be here. It's an honor to be moderating this discussion today. So we have a deep interest in driving financial inclusion through blockchain innovation. So I was really excited to be involved in drafting the regulatory framework that will help support informed policymaking, consumer protection, and open innovation in our sector. The World Economic Forum's Global Financial Council on Cryptocurrencies brought together great minds from a variety of geographies and disciplines, from business and technology to legal and regulatory. We all contributed our views on how regulators might foster innovation of blockchain and cryptocurrencies that can improve the lives of citizens all around the world. We paid special attention to the complex needs of regulators with these new kinds of cross-jurisdictional assets and called out examples of best practices. So after many thoughtful discussions, late night writing sessions, and video conferences, we're all very excited to be introducing our collective work to policymakers and innovators. Today we are releasing the GFCC's regulatory framework, a document that reflects our diverse groups' recommendations and aspirations for a well-regulated and more inclusive financial system enabled by blockchain and cryptocurrencies. So now I'm delighted to introduce our panelists for today's discussion. First, I have Caroline Malcolm. She's the Senior Advisor at the Organization for Economic Cooperation and Development. Caroline brings her expertise in tax treatment and reporting to the OECD to inform on taxation, best practices for digital assets, and uses of blockchain for administration. Caroline has led and convened groups at the Global Blockchain Policy Center and Financial Stability Board and was recognized as a young global leader by the World Economic Forum. Welcome Caroline. Next we have Ylem Kwak, a Senior Executive Director at Abu Dhabi Global Market. Ylem leads the Capital Markets Division responsible for authorization and supervision of financial market infrastructures and capital markets intermediaries. He also spearheads SFFSRA's strategy and efforts in the supervision of financial technology, innovation, and development of the FinTech ecosystem in ADGM. Welcome Ylem. And here today with us from FINRA is Haimera Warke, who leads the Office of Financial Innovation. The department is focused on FinTech innovation and analyzing emerging risks and trends related to the securities market. Previously, Haime was the Director in the Division of Trading and Markets at the SEC and earned degrees at MIT, as well as his JD from the Harvard Law School. So here we have another lawyer. Welcome Haime. And also I'll introduce Dr. Elfin Chess, Senior Technologist at MercyCorps who co-founded FinX VC and MercyCorps Ventures to expand financial inclusion through crypto investments, pilots, and capacity building in sub-Saharan Africa, the Middle East, Latin America, and the Caribbean. Elfin obtained his PhD at MIT in International Development and Technology Policy and has previously worked at the World Bank Group, Harvard School of Public Health, Risk Management Solutions. Welcome Elfin. And we also have Ambassador Gabriel Abed of Barbados who's serving in the United Arab Emirates. Gabe is Chairman of Abed Group and Co-Founder of BIT. He is internationally recognized as a leading authority on central bank digital currencies, math-based protocols, and blockchain technology globally. Having conceptualized and initiated the first global movement to encourage the use of central bank digital currencies. Welcome Gabe. And last but certainly not least, we have Paul Maylee who comes to us from Deutsche Bank in London working as the global head of security services and head of the corporate bank in the UK and Ireland. He has worked in capital markets for more than two decades. An early proponent of the technology, Paul has been involved in the blockchain and distributed ledger industry since 2013. Since then he's helped to establish and advise a number of startups, open source projects, and fintech consortiums. Welcome Paul. To anchor the discussion today, we will highlight the role of blockchain digital assets and cryptocurrencies in solving real world problems. Some of the most pressing issues affect the world's unbanked and underbanked population. Many of these questions were taken into consideration during our collaboration on the regulatory framework. But let me start off with the first question directed at Caroline. So Caroline, how can regulators and policymakers design regulatory and policy frameworks to balance innovation that brings affordability and financial inclusion while maintaining oversight and consumer protection? Thanks a lot Danelle. It's a pleasure to be here. And look, the challenge you speak about is really something which I think is not specific to this particular technology. It's something we see as we see advances really across the policy spectrum. So I think we should keep that in mind often. We think we have a very unique case, and yes, blockchain is very unique in many, many ways, but there is this common challenge that regulators face as industry continues to innovate, how to keep up with that, sure that it develops in a way which protects the interests of consumers and society as a whole in line with the values that we've expressed that we believe should underpin our society, but also letting that innovation take place. And I think it's absolutely right to say that this is sort of a very difficult line to walk. And there's not necessarily one right way, but something I think which is we being able to find kind of that middle road which balances out those interests, which are not really contradictory, can sort of come into tension at times, is to have that dialogue with industry and to try and do it very, very early and often. And that sort of a motto that we've always tried to bring to the work that we've done relating to blockchain and more broadly with technology at the LECD is to have that engagement whether it be sort of through industry groups or so with academia, civil society, to really have that diversity of perspectives coming out so that we can put those guardrails in place, which is really the expectation that societies have that innovation does take place, but it does take place in a way which is pursuing and I think also really in the long-term interest of industry as well. This is not something which is anti-industrial, anti-innovation, but making sure that innovation can take place in a way which is going to be sustainable over the long term, not just in an environmental sense, but in terms of kind of not going to be subject later on to regulation, which really means that the kind of technology or the industry has to pivot in a really significant way. So I think there's really sort of no golden key to this question of sort of early and often dialogue. No, I think that's great. Public to private partnership is always one of those things that's really important. So next I want to jump to Weilem and Alpen. First, Weilem, what are some of the challenges in bridging the different financial systems and making them interoperable between countries and sometimes radically different regulation? Weilem? I would say that when this industry took off some four years ago, the crypto regulatory landscape was nascent with no regulation and regulatory framework in most jurisdictions, but this has shifted in the last year and a half and a number of jurisdictions are starting to regulate the industry. Even then, unlike regulations pertaining to a traditional financial service, where there's a high level of harmonization across jurisdictions, standards applicable to crypto varies widely across jurisdictions with most regulators not up to speed on industry development. For us at ADGM, we have decided that we want to set a high bar from the outset and then to address the risk to the financial sector and concerns of different types of investors. The decision to regulate this space very early on and given the rapidly evolving nature of technology innovation means that we need to be agile and continually keep ourselves updated of developments through deep engagements with fellow regulatory and industries stakeholders. So we have been actively participating at the global regulatory and industry forums to have the conversation, such as the IOSCO and the global digital finance, to share and discuss our regulatory approach and experiences and being the first, in a way the first mover presents a lot of challenges because we really don't know how the industry will evolve, but indeed for us we have taken as M in Caroline has mentioned that it's very difficult to find a balance between regulations and innovation and typically regulations should not front-run innovation, but for this crypto asset space we have taken the approach that right at the outset we want to adopt a very high bar and over time as we engage the industry to understand innovation we want to then be able to fine-tune it. So at the end of agility is key that's one Caroline mentioned about collaboration I think that's very important we have to collaborate with the electricity holders as well as the industry stakeholders. One key example is with the travel rule requirement we are now collaborating with technology providers and other regulators to work on a proof-of-concept system to navigate how mutual authentication can be facilitated with minimum impact on performance and workflows by maintaining privacy so as to facilitate the VSPs compliance with the principles of the travel rule and the system will then allow the VSPs to securely exchange information on originators and beneficiaries when transferring assets. So those are some of the real on the ground stuff we are doing in order to expedite knowledge exchange as well as hopefully harmonize the regulatory requirements. Thank you Alpen how about you any thoughts on the interoperability piece? Thanks Danelle I'll just add a few points and agree with what was just said before essentially that I mean we have a system that has a lot of fragmentation right now and I think that people are looking to leverage a lot of what's possible with these cross-border technologies to improve certain types of patchwork or fragmented systems in our current model and I think that there's another balance that's also trying to be played out essentially that has to do with the operational priorities around financial inclusion versus financial integrity and I think that what we're seeing right now is that there's things that need to be taken into account to make sure that we find that balance and I think essentially there's also another question around the fact that in some of these standard setting bodies like FATF, BIS and others what we're seeing is that certain types of standards that are developed have an unequal kind of effect in terms of enforcement in different jurisdictions and what we're seeing in the data is that it's playing out in terms of the usage of cryptocurrencies or the adoption of these types of technologies and I think that taking that into account is actually going to have a major effect going forward as more and more jurisdictions are able to actually comply with and moderate some of these financial integrity related regulations on the ground. Yeah thanks I think the financial integrity point isn't one that I had actually really focused so much on until actually we got together and did this paper because you raced a lot of it during that discussion so that was really helpful. Gabe on all of these issues about usage of blockchain and cryptocurrency recognizing that cross-jurisdictional and the digital nature of these assets is a challenge for regulators what are some of the important considerations that you've actually thought through in working with central banks and either creating or supporting their use because this is the topic today CBDCs. So I think what's important to understand and really its power amount is education. Education really does come at the forefront of this space especially for that of the financial regulators and monetary authorities such as central banks and it's from that place of education that it then births a much greater understanding of what these technologies really represent. It allows for much more enhanced monitoring and visibility over a financial system. It can it can bode for a much more efficient economy and marketplace. It creates a much superior payment ecosystem and I think those are some of the key areas that central banks are really starting to drive home right now but then more specifically the understanding that these types of technologies are actually bringing prosperity and economic growth to the citizenry and to the corporations and while it's a central banks job to ensure the stability and trust of the dollar and the economy is there it's part of the mandate as well to ensure economic stimulation occurs and one of the key things that we're seeing is that central banks are beginning to realize that it's actually in their best interest to begin supporting these types of technologies. The other side of it is central banks and monetary authorities and regulators in general are realizing that within their own domestic markets they do have subject matter experts that they can lean on and and bring into the fold to actually help with that educational process help create a watchdog type of environment which in essence helps bolster a much better ecosystem for supporting what's right and what's wrong rather than central banks themselves having to feel like they need to take on these activities on their own. They're they're they're realizing that their domestic market in in many cases do have the best interest at heart of their local economies but it's also an understanding that every single and I think why Lum touched on this earlier is that understanding that every single market is different so when when speaking about what can be done on a cross-border basis you know the the standards the laws and the appetites they change from country to country and it's it's all about continuous education and and continuously to evolve the the type of engagement that occurs because that is that is really paramount it's not just learn once and that's it it's a constant learning curve what was what was new and innovative last year is now outdated today I mean we've seen in 2017 ICOs uh in in 2020 or 2021 we're seeing NFTs and these types of subjects are going to continuously come because this field is only now getting started we're we're we're what 11 years into the blockchain evolution and and if we were to judge the internet based on its 11 year cycle well we'd be we'd be making some serious mistakes and I think central bankers are waking up to realize that's the reality that they're living in that these tools actually are in fact their best friends it's no longer a system of that these systems are used for drug users or hackers it's now realizing that this is enhancing their capability of doing their job with with a higher level of accuracy and and we're starting to see that which is which is the which is I think one of the greater blessings in in the last few years that we're noticing but it's also an understanding that there's major risk it's not all all flowers and perfume there's there's some major risks that are faced to central banks that they need to gather their thoughts around such as capital flight risk and and hacking and and these various other cybersecurity um uh flaws that may come about and it all once again boils back to my very first statement it's a continuous uh process of education education education you're muted to know I just wanted to keep you guys on your toes um I love the idea of thinking about and comparing uh what we're doing now in this space to what happened to the internet because it is such an important thing to think through how young this technology is and how much growth we actually are going to see here in this space hi me many households depend on remittances and businesses rely on cross border payments so how do cryptocurrencies help decrease friction when value travels between countries and in different systems yeah um so I mean there's a number of ways they do that I mean one is is really by the peer-to-peer relationship kind of from our vantage point at FINRA our focus is really um on kind of what are the potential benefits that exist as a result of blockchain technology looking at from primarily from a securities lens as opposed to a payment lens but then also thinking about it from the context of what are the potential benefits uh and and risk that those benefits that potentially bring on if you want me to digress a little bit um about a year back a friend of mine um got me present uh where we went to the uh where we got like an adventure package in west virginia um and we were going to go ziplining with me my wife for anniversary uh as well as whitewater rafting and I was really excited you know mine my first thought about this was like oh my god this is going to be so much fun um and you know my wife's reaction was well are we going to need helmets when we go whitewater rafting are there going to be a lot of rocks there uh you know how high are we going to be going ziplining um and you know the idea around crypto really kind of brings these two issues into forefront right you know you need to think you need to have the sense of an adventurous spirit to be able to explore what's possible out there you need to realize what's potentially beneficial for the industry both from an investor standpoint both from a firm standpoint but then you also need to step back a little bit and realize what types of new risks are potentially being introduced to the system and what type of mitigation factors do you have in order to be able to address those risks it's really both from a regulatory standpoint and an industry standpoint when you can marry those two ideas that you're able to really take the full advantage of what blockchain can offer yeah I think that's really true in the chat box or someone noted that that from their standpoint that from a consumer side and an enterprise side the changes in the education needs to happen so much so often like every four to six months because everything changes so quickly you just look at where the industry was in January and look at where it is today it's in a completely different space so I love the work that everyone here is doing to really focus on the remittance use case and to really make that come to fruition and to decrease that friction but I want to turn our attention to the opportunities being presented by the DeFi application to businesses and consumers because cryptocurrency and blockchains make new kinds of financial products and services possible in the form of decentralized finance Paul what are some of the needs being addressed by DeFi applications using digital assets? No thanks Danelle I thought you might give that question to me so I was pondering it before the other meeting in answering that I don't want to almost mention like an individual use case right because we could talk about decentralized exchanges right we could talk about like smart contracts what I almost wanted to talk about was like the foundational advantages that the technology brings which everything else kind of builds on top so you know when I first got involved in this arena about eight years ago there was two kind of like immediate case studies that I thought had the most gravity for what the industry was going to do next the first one was the idea of federated trust the fact that you would be able to trust something or trust somebody right without necessarily needing to have to go through the due diligence and or the trusting of a third party to represent that somebody else was trustworthy the second element was the idea of trying to eliminate non-repediation from like inside the financial industry right so that you could know that if something happened whether or not it was something related to a contract or right some other kind of events like you know we might consider akin to a corporate action that what would follow next would then happen kind of automatically right without somebody else needing to do something I think if we think about the the potential for distributed finance we should keep reminding ourselves of those two advantages and then the other thing that I would say it generates on top particularly is I think one of the most difficult things we'll need to address I mean to know you mentioned earlier the challenges around you know the cross jurisdictional nature around the way you know financial markets already operate the next one that comes along of course is interoperability between the old ecosystem and and the let's call it the new one right I don't think any of us would believe ever for a moment that we simply just go home on a Friday and then come back on a Monday and let the actual infrastructure has changed it's going to be a very very gradual progression and I'm sure it would take you know more than a decade right but what we need to be able to start to do now is create like the the toll gates right the ways in which those kind of like two parts of the financial markets like intersect right and then eventually they will become like more and more seamless I think there might be a point in time where you eventually start to decommission right the way those services operated before like obviously we're all familiar with using like relational databases and then we move on to like like the new world infrastructure that you know the blockchains and systems built via distributed finance would enable so I think there's a the the number of possibilities are completely endless right right now we are we're just scratching the surface of what's going to happen next I do think that this is an area that's particularly interesting and I think challenging for regulators does anybody want to speak to the challenges that regulatory regulators face with respect to DeFi and specifically I think that first of all I think some people don't it was a great explanation of essentially the the value that DeFi brings in the different opportunities and products they bring because I think a lot of people use the term and don't know what it means but what are the challenges regulators face with respect to not only understanding this but figuring out how they're going to get their arms around it I think one of the challenges I could jump in is what doesn't mean to be decentralized right you frequently have these DeFi systems that are set up where you'll have one or a group of operators that says actually setting up the process then we'll hand it over to another group that's typically run off based of governance tokens so they'll have no people who stake a certain value into it and receive certain amount of governance tokens and based off those governance tokens set up rules for things like interest rates that need to be charged on a DeFi lending system or rules for other types of services that need to be provided and you get and you ask yourself you know kind of what does that mean you know in some ways it almost looks like a shareholder that's holding shares in a company where you have forward voting rights that that that allow you to be able to control interest and what's going on in the company in other ways it's very different right because you have these autonomous systems that's software enabled that basically run off what's going on and you have potentially less specific controls but getting around what it means to be decentralized and what that means for the underlying risks that exist within the system I think is important a good example of that is these governance tokens are frequently available for sale in the secondary markets right and if those governance tokens are owned by different people than the stakeholders that exist on the marketplace what does that mean for the governance of how things are run and then kind of moving on from from the governance side another thing to think about are the products are offered on these networks right so are things like you know Zcash or other types of products that potentially raise issues from regulatory perspectives running on those networks is thought given to the status of those products whether they be derivative products securities products commodities at least in the US lingo and what does that mean for the rules of the road for how they're actually interacted when you're dealing with different participants or setting up trading venues where you can actually engage in transactions so you know it's one thing that always I like to think about when you see new technologies are the technologies are very frequently be very innovative and interesting and set up ways to do for different business models but from regulatory perspective that overlay of things that you want to be concerned about from consumer investor standpoints are still there and they can't be ignored so again like going back to the theme while you want to kind of promote innovation and you want to have different ways of being able to do things in a way that's more efficient in a way that potentially provides services to people that you couldn't before you also have to be aware that reason for regulatory framework that existed in kind of the old world if you will was for specific purposes and what are the ways in which those purposes are being satisfied in this new framework. I could jump in there sorry Willem you go ahead no go on go on please Gabriel you go on please I'll make mine quick I honestly and this is probably Willem you could confirm this but it's probably the most challenging time that it's ever been in history for regulators you know they're waking up every single morning with a new subject that they need to become educated on and these new subjects can quickly balloon to billions of dollars in value touching many of their citizens overnight and the balancing act of having to educate and then decide what is the best protocol or action to take because the reality is to do nothing you potentially provide systemic risk to your economy and to do something you're potentially thwarting opportunities for your citizens so it's that very difficult place right now and what makes it even more complex is that it's consistently changing and that the learning curve is extremely steep you know we thought we got our heads around ICOs but then all of a sudden there's this new thing called non-fungible tokens or governance tokens and all these various other aspects of the technologies that are coming coming to life and it seems like they come about you know Paul as you said you go you go home on a Friday you come you come back to work on a Monday and it's like hey there's this new technology and an image of a rock just sold for a million dollars and what's going on there so it's it's that new challenge is is I think providing a whole new way for regulators to have to really reinvent themselves and understand that this isn't the old way of doing things and the conservative approach of of sitting back doing the research analyzing considering and then taking action may not necessarily work in today's markets so if I could just jump in there Paul mentioned very a few use cases and opportunities that DeFi presents and from a regulatory perspective we recognize that the benefits that DeFi can bring to the industry. I would say as a regulator I identify a few risks that can be posed to the users and one of them would be it is unclear who is accountable for DeFi services. It is not clear users of DeFi should be considered as self-dealing because their transactions are directly with other users' wallets. Administrators of a DeFi service may deny liability to service word to mount function. The second risk I would see is DeFi is actually less understandable than the traditional finance although the behavior of the smart contract may be published it is not clear whether users of DeFi services can understand what that means. Furthermore users may have incorrect expectations of DeFi services given the widespread use of traditional financial terms. The last risk that I see it has to do with money laundering and terrorist financing activities is possible to create multiple transactions from one service potentially making tracing of such activities harder to track. So as a regulator I always ask this question should DeFi be regulated? Who should be regulated and what should be regulated about DeFi? So it is a regulatory nightmare and the challenges are clear and present. Well what I love about this is it sort of brings us full circle to the one of the first things I think Gabe said which is education education education and what I also love is that Jaime you started off by using that shareholder word which we're all really afraid of but then you tried to get to the place of understanding that that is maybe one component that it looks like but there are other things in there that are different and I think that that's part of education. It's pulling it apart and figuring out like Wylem said about the different components of it and what that means. So it's not easy but I think together in that public to private partnership we can really really make this happen. Alpen I have a question for you around stablecoins. How do stablecoins fit into the DeFi model or also just like in terms of the being offered for reminces? Thanks Chanel. Yeah happy to answer that. Also just wanted to chime in on the on the previous point in that one of the things that we're seeing with innovations like DeFi is that they are efforts at this intermediation and sometimes they create new kinds of intermediaries and that I think is the challenge for regulators to understand what you know what what does that actually look like and how to regulate that but in some cases they create entities like for instance these DAOs decentralized autonomous organizations which also create questions, definitional questions. Again for regulators this is a challenge in that regulations generally are and regulators are pre-assigned to specific bodies and areas of monitoring supervision and when you have these types of innovations it's hard to see exactly where this would fit. I think stablecoins coming to that point are obviously a very important topic just to highlight one one thing in particular about stablecoins that is of importance from a financial inclusion perspective which is primarily what some of the folks that we're working with on the international development and humanitarian side is around the ways in which stablecoins mitigate some of the volatility risk for conducting cross-border payments in a real-time fashion in a low cost in a low cost and low friction mobility and what we're trying to understand essentially and to be quite honest I think we're just beginning to see new use cases for it beyond the internal crypto economic uses so you have a lot of transactions being taken kind of taking place with stablecoins within crypto to crypto or between cryptocurrencies and now you're seeing the uses of stablecoins in large part now in all types of different sectors including what Gabe mentioned in terms of non-fungible tokens you also see people holding their balances to corporate treasuries in stablecoin or interest earning stablecoin accounts from a financial inclusion perspective remittances still account for a majority of how people get support when they need additional money for large expenditures for for living expenditures people support their families and friends abroad using remittances and this tool of a stablecoin actually provides significant advantages around again real-time transfer and understanding that the value that you're transferring from you know one country is going to stay consistent on the other side we're actually testing just as a couple of examples how this can be used for vulnerable populations we're often asked by regulators like what is the actual evidence of financial inclusion from some of these technologies and so we've been testing a few one of them is around under an unemployed youth that are trying to get access to job opportunities on the internet yet you know even if they're able to complete tasks or have the have the skills to to engage in the digital economy they they hit up against walls when it comes to receding payments and because we work in a lot of countries that are considered quote-unquote high risk in the current financial system you can see that the costs and the delays and the frictions for receiving payments on the digital economy for some of these people are quite high by using stablecoins they're able to essentially be paid in a much more reliable way and a low-cost way we're also seeing use cases related to refugee populations for instance that are moving between one country to another and they're not necessarily have they don't necessarily have the easiest pathway to opening up bank accounts in in their in the new country so that could be because they're you know an official refugee and the country may not have a pathway for them to open up a bank account but it may also be that there are other roadblocks they may be an informal refugee and will never necessarily have the higher pay to open up a bank account so I think I was hearing something else and so what we're really excited about and obviously I think that there's risks on all sides that need to be taken into account is how can these technologies be used for especially vulnerable populations that we can agree on either we define them as unbanked or as excluded from the current financial system and how we can address those needs using these technologies while keeping in mind that we have a lot of other risks related to illicit finance and others that we need to monitor of course what we're trying to also balance that with is the fact that blockchain enabled transactions allow us to monitor and audit transactions in ways that you couldn't otherwise do from the cash side and that's primarily the default that we see in almost all the markets we work in is that people are operating on cash and this provides an alternative that's actually auditable in a way that wasn't possible before. Thank you Alvin that's awesome I think that this is one of the use cases that I think folks talk about a lot and having being able to describe like how this actually benefits the end user I think is a really important part of really teaching people about blockchain and the value of it. So let's discuss ways that the industry might communicate with regulators to address the needs of all stakeholders and that includes technology companies entrepreneurs and consumers and in Caroline I wanted to ask you we've observed that when regulators only approach cryptocurrency as a tax-raising opportunity as we saw here in the US it can hamper development of new technology or it can also really light a fire under the community to respond to it. How can regulators harness the revenue opportunity while still creating and enabling an environment for the industry to grow across multiple use cases? Yeah it's a good question now and I think obviously look at the discussion around the infrastructure drill and the crypto tax reporting provisions you know did cause a lot of attention and I think I mean yes obviously there's a revenue-raising element to it I think no doubt about that and the sort of numbers that were thrown around were sort of very interesting from a headline perspective but I think the reality is and I think this is also where the sort of flip side for industry is is that in wanting to have the you know the year of regulators and wanting regulators to adapt to you know this new technology is that we also need to see this recognition from from industry as well that in a lot of these cases you know the coming back to your first question around you know how to approach regulation in a fast moving space is often you will take a sort of a principle-based approach and look at what's happening so I think I think for anyone who's been watching this space and has seen the kind of evolution over the last four or five years of kind of introduction and now kind of revision or update to the AML rules will probably not be surprised to have seen you know crypto tax reporting provisions come into into this space and in the same way we saw before that sort of you know beginning to have some guidance around how these this new asset class fitted into tax treatment rules and I think what's so interesting about that is in in many cases when we look at in in certain legal framework into the grid space in in the case of tax is that there are analogies there are ways to make those systems fit together in in most cases not in all but in most cases you don't necessarily need an evolution of of the system it's about thinking through okay how you know how you know hard forks similar to other things we've seen either in traditional finance or in other parts of the economy are similar and therefore should be treated similarly in in a in a tax sense and so I think that kind of flip side to wanting you know regulatory clarity we also have to recognize that there is often rules that already exist and complying with those laws is really a first step so what we're seeing it's in terms of crypto tax reporting I think and look I don't want to get too much into the specifics there because I think what we ultimately saw you know we saw the first draft come out we saw lots and lots of discussion different proposals put out there and ultimately we ended up back in the first draft but I think really what was going on there is and it's kind of also seeing that this was a case of making sure that you know treasury had the powers to then work on something that was more detailed work on something which was appropriate that didn't capture people that didn't need to be captured you know miners and and you know particular nodes in the system and so forth so I think you know that's why I don't want to get too much into the detail of what was in the infrastructure bill because I think you know it's interesting because I think a lot of the discussion was premised on perhaps some ill will which exists perhaps between the industry and and and sort of regulators sort of say well you know you need to act you need to provide clarity in this space but in a lot of cases you do have existing rules and I think that's really got to be the first step the law as it stands today does apply and I think it's interesting for this space because you start if we go back to the origins you start from a very anti the system movement and as we've passed through time we've seen that you know wanting to be part of that system wanting to have the growth that being part of that system allows but part of that is is recognizing that there are these rules which already exist which which need to be complied with so I think that's sort of a first point so I think that's kind of the flip side to the point I was making originally the regulators need to listen they need to engage early and often with with what's happening in terms of tech developments but equally you know there are these rules which have been developed over time often starting with this principle based approach which can then delve into specific details as as needed but I think there needs to be a kind of recognition on on on both sides and maybe I might just take the opportunity of having a friend for just a moment to come back to something you were talking about in terms of you know how do you make regulation at a very high level in the kind of when you're dealing with decentralized systems and I think something that we and you know some of the other people that we talked to are really thinking about is thinking about you know working with decentralized systems not just from a kind of a top down all these are the laws and that's how they apply because as we've talked about you know a lot of the things that we've taken for granted in legal systems like there's somebody on who you can place liability for example is not the case when or it's not as clear as it might be when it comes to decentralized systems but I think looking at kind of these different sort of mechanisms around kind of like this you know back to the early 2000s around sort of code is law and thinking about well you have a law but you also have different mechanisms to keep the whole system in check and that can be you know social norms that can be market demands that can be sort of the code the architecture which can all fit together with the laws and then you have user behavior of course to sort of to to kind of create an ecosystem which is not just reliant on on laws and kind of in terms of achieving different policy objectives but looking at the ecosystem as a whole and I think that kind of more holistic approach may be one that that we continue to explore as as kind of defy and these decentralized systems develop. I may also expand on that based on your question of where can regulators also see new areas of revenue and it's it's not just from the taxation side of things it's actually applying said technology to the existing systems that they use today. If I could just touch on one example with central banks the the cost to print fiat currency it's it's relatively expensive and and there is a benefit to central banks known as Cineridge which is the money that they they make after against the the cost of printing and and when you look at using something like blockchain technology when applied to that process you're talking about 99.9% efficiency against that that that's that that level of Cineridge and then if you you can really extrapolate this to any area of of the the regulation cycle even all the way down to how they collect taxes you can you can begin using things like smart contracts directly at the point of sale where two outputs are created one that goes to the merchant and where the regulator the tax authorities being paid real time so it's it's really just not just looking at trying to to tax to tax the revenue potentials but looking at how the same technology that the entrepreneurs or the corporations are using how the regulators and the tax agencies themselves can apply that and get a greater level of efficiency and a much greater service for themselves so I love that Gabe and this sort of leans into a question that I was going to ask Paul which is taking it on the flip side from the builder standpoint and this is one that was put in in the chat how do builders how should they approach this because I think it's the it's the same idea when you think about central banks and them looking at their technology and seeing where they can leverage blockchain to help them and to generate more revenue for themselves like Paul what can builders do to help create that conversation or to think about it or get regulators to think about it from that standpoint it's a I mean I do I can't help thinking that maybe we're missing an industry body right and I'm not I'm only mentioning this as an example because I know it has some wrinkles that as an industry we would need to talk about right but I kind of help thinking that something akin to for DeFi that might be similar to what people would recognize the role that is the performs might actually provide like some utility right like there there's a you know a way that you can create almost a a clearing house for requirements so that if you are a builder and you almost say look I can't go to one place because right now I have a really fragmented environment and if I sold for just one jurisdiction I don't know if I can actually then port it to any other jurisdictions that's obviously a really difficult place to wait and I think that's obviously also something that stifles innovation right because you can't build efficiently in the same way that you could say in the current you know securities markets right where there's a much higher level of kind of shall we say standardization even though the regulation in say Europe or inside the European Union is actually fundamentally very different to obviously what we would recognize in the United States with like you know the act of 33 and the act of 34 so it's not necessarily that countries need to be the same but like people need to know that those things sort of have technological and product outcomes that they would recognize and that they could build towards it was already mentioned earlier by some of the other speakers like is around like who sets the standards I think it was I think it was Alpen that was referenced like we have these these you know you know multinational authorities but how they're actually implemented in individual jurisdictions right becomes becomes more difficult I think if there was a way of being able to represent you know either new use cases right or new product ideas in a way that you could get some kind of like consensus feedback I think that would be a really useful a really useful outcome maybe today is the day we we start that we start that idea that's great let's do it all right so what I want to do now is I want to open it up for all of the audience to ask questions or to offer some ideas here we have about 10 minutes left so let's open that up and anyone can jump in I have questions if no one else is going to okay well we did have one question that was in the box that talked about Caroline do you have an example where current regulation applies to digital assets with little or no change that's a tough one yeah maybe not as tough as people think and I think that's where that you know that some of the issue lies is that when you get into the detail and I'll take taxes as you know kind of the area of focus because that's you know they always used to have done some some work in this area recently looking at tax treatment of crypto across about 50 jurisdictions so predominantly OECD members but also some some non OECD economies as well and if we look there for example we can see that in the most for the most part countries classify crypto as intangible property and the tax treatment then flows from there or and that's in the case of income taxes or if we think in the virtual tax base they're treated as similar to fiat currency and and the tax treatment flows from there so I think there's there is a there is cases where we can see that there are analogies to be made it you don't you know a revolution is not necessarily quite I mean I don't want to say that there's not there's certainly areas where we need to either see clarity or you know for the law development to to to reflect the changing circumstances the changing features and I had certainly certainly be the first to to say that because I think in some ways the underlying technology really challenges what we've thought of of this tech neutrality in in our laws and I think because I think a lot of the assumptions that we have in many of our laws particularly around this idea that there'll be one person responsible or there's some entity that you can put your hands on we see that in the draft law for for mica for the markets in crypto asset law in in in Europe for example where you know in the absence of having that person a person will be designated or that you need to create an entity in order for them to then apply the rules in a very similar way historically so I certainly recognize that but I think in some cases I you know there are and taxes is just one example where we can draw analogies which are relevant which you know do hold and and where we can therefore apply existing frameworks onto onto these new forms of assets okay anyone from the audience I have a question so we mentioned in the report that the digital identity will pay a huge part in de-risking some of the cryptocurrency risks especially when when we're sending our receiving transactions of large sums of money where do you see this mechanism presiding is it within the blockchain ecosystem or as an artificial or external layer I would say at the government side or do you see big tech playing this role of providing digital identity if I could just take a quick stab at that Dr. Marwan I actually think it would be all three and it really does have to be a combination of all three what I mean by that is identity is really something that needs to come down from the top down approach as in the government or the authorities themselves are the ones that usually do clarify a state-based identity level we would see the advantages of using blockchain for such a circumstance from the efficiencies that it brings to the clarity the provability the tracking and the other aspects and then we'll see big tech enabling the intersection between the government and the utility of blockchain based identity this would enable a much cleaner more recognizable much more transparent marketplace because at the end of the day one of the biggest costs that corporations face and you often hear this fiasco around banking called de-risking anti-money laundering counter terrorism financing and all these other three letter words or acronyms they usually boils down to the failure to adequately identify a transaction or a person behind such a transaction and being able to create a much more efficient marketplace that allows lower cost to the corporation to have their users become identified allow a much more provable environment around that identification it ultimately will ease the mechanisms of transactional activity it would create a much more accurate environment for the regulators and then it does leave that level of a perfect paper trail in the form of an immutable ledger system yeah let me let me just append to what Gabe was saying there and thank you Dr Marwan for that question if you actually look at some there's some very interesting consortium work in Europe that's already started ID union is worth taking a look at that's an open source project but that's exactly what I meant earlier when I started to what I was referring to like federated trust right I think the the manifestation of that as a product is like a digital identity and yes of course that does need to rely on some kind of like you know government sponsored authentication for how that how that you know identity would manifest itself but there's many other ways right that a private individual can create a self sovereign identity and there's no reason why obviously a corporate entity or a legal entity of some other flavor can't do that using many of the of the same techniques so I think that's actually one of the biggest enablers of the whole DeFi space right is that we actually solve that problem so let me just do a follow-up question to this what about the reputation system so do you think like having multiple identities with with corroborated kind of sources of providers as Gabrielle mentioned with a mix up of systems do you think that has a place also and should it also be based on on blockchain technology if I could quickly shoot off the gun here again I don't think identity is just one thing it's not just a national identity or passport driver's license your social identity it's a combination of many many different things and ultimately whether it's your reputation your credit your your university degree your diploma all of these things are eventually going to meet an intersection and that's why blockchain is is so cool for this type of application because it allows these different types of asset classes if you will to interface and interoperate in a way that makes them useful to whoever is looking to validate against that position and I don't think again identity is just one thing it's made up of many things many of you in this room know me as Gabriel you might be my social identification mechanism but beyond that the government may know me as a Gabriel from a different type of identification perspective and ultimately it depends on the application that we're aiming to to authenticate towards and that will define the type of identification asset it's going to draw from so the short answer to your question Dr Marwan is yes it's going to be a mix up of and this is my opinion I think it's going to be a mix up of several different types of sources of truth of who you as a person are and I love this because we're already seeing industry private industry work with governments in different parts of the world to start to do some of this and so I think it's a really interesting space that we're going to see grow some more there's obviously privacy considerations that individuals want to think through about this and so there's a lot there to unpack but I do think it's a really cool area for blockchain and to see how the future holds in it thank you any other comments or thoughts from the audience okay I'm going to jump in and I have a question for Jaime and Alpen there's a recognition that industry is primarily responsible for communicating the value of blockchain this is different when we in the early days of the web we sort of didn't believe that we needed to do that that we needed to work with government and to communicate what the value of the technology was that we were building and I think that there's a really nice shift here on this side but how can industry better communicate with regulators and improve their understanding is it a use case focus is it a technology focus how can we do this Jaime why don't we start with you first yeah you know I think it's important for us as regulators to be mindful of benefits and and I think it's also helpful for the industry to communicate kind of how this technology can maybe add efficiency to the marketplace how it can potentially offer the types of services to investors they potentially couldn't have before all that being said I think the role of regulators is not to put the scales on one type of technology or another type of technology it's really to allow an environment in which various types of technologies can compete on an equal footing and as such I think you know what's important is when industry comes and talks at least you know with respect to our organization it's important that they thought out kind of you know what are the benefits are and how they may change things but also what are the potential kind of new risks that are being introduced to the system not to say that there may be some old risks are getting taken away but they've thought that out and they thought about what are the mitigants around that what is the way to the extent they think the current laws don't apply in a way that is appropriate what are the principles those laws are trying to serve that's that's being served in the new dynamic how are they meeting those objectives um and and I think that will help having the discussion with the regulators because I think that's primarily what we are thinking about are kind of what are the potential new risks are being introduced to the system what are the ways in which things may differ that we may have to think about we may be able to achieve the same thing but maybe doing them in a way that's a little bit different um I think all that is is having the context of the benefits it's important to have all that as as kind of background information but I think those are primarily the areas that I think most regulators focus in on sure yeah I'll just I'll just add a little bit I think um and I think the main point is that it's it's interesting in the world of cryptocurrencies and and blockchain in that a lot of the activity taking place is done quite transparently at least in the from an operational standpoint and that like a lot of the code is open source a lot of the conversations and discussions taking place happen in these like discord chat rooms and whatnot and so there's a lot of there's a lot of activity taking place like out in the open quote unquote like even um yet um you know clearly there's there's an asymmetry of information in terms of you know what exactly is taking place what kinds of innovations are being developed um and one of the things that um crypto brings up is that it's it's essentially introducing financial primitives to the internet that obviously are going to create a whole new set of of of risks and issues that need to be dealt with and I think that as Jaime mentioned um there's a lot that innovators that that are now operating at scale can do to be a little bit more proactive about understanding like what are mechanisms that can be integrated to mitigate risk um how to communicate risks that are actually emanating from their from their platforms or from the from the system at large and I'm starting to see more academic articles um including you know authors from from the sector itself talking about the risks that that DeFi for instance actually generate that need to be dealt with um and then I think that um as Gabe mentioned there's an education component that's going to be ever present just one this is definitely an iterative technology at the same time I think one of the things that doesn't get communicated enough is that crypto is more than um you know financial assets or financial transactions or doesn't necessarily get encapsulated in the financial um framework or paradigm because blockchains as Paul mentioned are um you know paradigmatically different in terms of how we communicate trust between parties and that has implications across the board for how we store data how we access data how we transfer it the tokens that are generated with crypto applications embed rights in very new and and in some ways unprecedented ways as we're seeing with NFTs etc that need to be taken into account I think that there's education on all sides I think at this point that need to be dealt with and I think more of it is actually just going to help um and and and I agree that it's it's a little bit different than what we saw in the previous era with with internet um and and communications technology again this is you know front and center like the financial applications are front and center right now and so I think that there needs to be more of that two-way communication thank you Alvin I think Brad I was gonna jump to you and I was gonna say I know we're a few minutes over but we're we started a few late so Brad I know that you feel very passionately about education and I thought maybe you could have the floor on that yeah well actually I mean I think you introduced this at the beginning that you know education globally is critical I think uh you know Jaime's comments he just made resonate with me in that in it's frankly interesting that uh the US in many ways I think is behind the education scale I think one of the things that we can all do I think is highlight what leadership we're seeing from other countries that are acting very responsibly and you know having thoughtful regulation where there is appropriate oversight it's not you know uh unregulated by any stretch and I think here in the US the more we can do to highlight that leadership in other countries I think the more useful it is for companies trying to operate in US and obviously as the largest economy in the world I think no matter where you're based you should care about what's happening here in the US and so part of that is not picking favorites part of that is having clear rules of the road and uh you know I think the more we can do to educate as you introduce the beginning to now I think the better yeah thanks Brad I mean that's part of the blessing and the curse of this when there's new technology but I do think if there's openness on the regulatory side to hear I think that there's a lot of people on the other side that really want to talk um so I think it's really honing in and leveraging some of the the ways that Jaime thought about about that's articulating that to regulators that we need to really think through as we present these things out in the world this was an awesome panel thank you guys thanks to the audience for joining us it was the really nice way to spend an hour in the morning um please do take a look at the global financial council on cryptocurrency's paper on navigating the cryptocurrency regulation the link is going to be put in the chat box I'm grateful that you all came and thank you to our panelists and to Weff for for putting this together for us