Last week we attended the Blockchain Africa Conference 2019 in Johannesburg.
The Cape Town leg of the event is set to kick off on 6th March and if you’re on the fence about attending we’re here to tell you it is worth your time.
Among the speakers at the Johannesburg conference was director responsible for economic advisory at ARQ Group, JP Fabri.
Together with a number of other entities, ARQ Group helped the European nation of Malta establish regulations for cryptocurrencies and blockchain technology.
Ahead of his talk at the Blockchain Africa Conference, Fabri said, “As one of the emerging sectors in the Maltese economy, the government is paving the way to establish the ‘Blockchain Island’ by enacting laws that offer comprehensive legal and regulatory coverage of blockchain technologies and cryptocurrencies.”
The director tells us that where Malta succeeded in establishing regulations for emerging technology was in its political will.
“It believed in the future of cryptocurrencies,” says Fabri. “If you look at the prime minister’s speech at the United Nations General Assembly of last year, he made some very strong remarks on the potential of cryptocurrency and blockchain to revolutionise the world. There is a very deep nested political belief and will in the government itself that this is a sector of growth.”
Where Malta could have struggled is when it came to falling in-line with the European Union’s laws and directives which don’t really account for unregulated technology such as cryptocurrency.
This meant that the Maltese government needed to strike a balance between the regulated and unregulated, and it managed to do so. However, Fabri points to a collaboration between government and the private sector for this ability to strike a balance in begin regulating and unregulated.
Experts in certain fields were called on and input was garnered from a multitude of entities in establishing the regulatory framework for blockchain and cryptocurrency in Malta.
The challenge for regulators, according to Fabri, is that they need to establish a framework that is both competitive – for drawing in investment – as well as robust.
Striking this balance is a tough job. Don’t regulate enough and you leave room for exploitation. Regulate too much and you stifle innovation.
“Governments can’t be the people doing this because governments are focused on running the country. We can’t expect governments and regulators to be the be-all and end-all. I think collaboration with the private sector who are ultimately facing the challenges of business is key. For regulation to remain relevant and for a country to remain attractive to international investment regulatory systems need to be developed in a way that is open, that is collaborative and that is adaptive,” Fabri tells Hypertext.
But regulation is just one slice of an ever evolving cake.
“A regulation can be beautiful on paper but it needs to be implemented correctly. You then also need the capacity to not only implement it but monitor and enforce it. A regulation is as strong as its weakest link,” says the director.
As Fabri goes on to say, if regulations are not enforced that could contribute to the industry losing trust in the regulation. Education can help combat this but it’s just one part of a complex equation that countries are still getting to grips with.
This is where international collaboration can be helpful if not required.
“We’re living in a world where it’s not single jurisdiction but multiple. You need to see how regulation affects the operations of a company in other jurisdictions. It’s about being organic, adaptive, reactive, proactive and coming together to share knowledge,” explains Fabri.
At the same time private companies being consulted by government and government itself should be mindful of what sort of companies are attracted to a country by virtue of its regulations.
There is a lot to consider when it comes to regulating an industry, particularly an emerging one such as blockchain but the key thing we took away from Fabri is intense collaboration.
We’re seeing that to an extent here in South Africa where the South African Reserve Bank released its Consultation Paper on Policy Proposals for Crypto Assets earlier this year.
Something of interest that Fabri mentioned has us wondering if local government should perhaps put its focus on blockchain technology as a whole rather than a slice of the tech which is used for cryptocurrency.
“I truly believe that blockchain is a transformational technology. It’s a foundational technology on which a number of applications or use cases will be set,” adds Fabri. “I think the benefits of crypto will only be seen once everybody understands the benefits of blockchain, not the other way around.”
So while local government is rallying around cryptocurrency and the regulation thereof perhaps we should be looking at the bigger picture.
The SARB is already in the process of drafting up regulations for South Africa as relates to cryptocurrency but as with all things, there is a process that must be followed. Part of the process calls on stakeholders to take part in the process and from what Fabri has told us, if you have a stake in this sector, get involved.[Image – CC 0 Pixabay]