Standard & Poor's (S&P) has just published the attached report around Regulating Crypto --looking in detail at the key challenges and implications for regulating various crypto assets and activities, such as Stablecoins, Digital Securities, Crypto Tokens, Decentralized Lending, Nonfungible Tokens (NFTs) and Crypto Asset Exchanges.

They also look at various jurisdictions and how advanced they are in their regulations, such as the UK, US, EU & China, as well as ‘crypto-friendly countries’-- in particular Switzerland, Singapore, Australia, UAE, and El Salvador, who are eager to attract crypto and blockchain players and become hubs for the industry.

Some of the key highlights from the report:

• Regulation is shaping up to be a defining feature of the crypto ecosystem over the next two years.
• The significant losses caused by the recent rout appears to have toughened the regulatory resolve of even some of the more crypto-friendly authorities.
• We see strong differences in the policy and regulatory approaches between--and often within--jurisdictions; for instance, in terms of policymakers' support for a regulatory, legislative, and operating framework that is conducive to the local development of DeFi and crypto-related activities.
• The U.K. has strong cards to play. Compared with the EU and the U.S., it benefits from a simpler policymaking structure, with fewer policymaking bodies involved in the process of establishing a regulatory framework for crypto assets.
• The policy stance of certain jurisdictions appears clear: for example, China has banned all crypto activities and is unlikely to reverse this decision, whereas El Salvador passed a law in 2021 that made bitcoin legal tender. But most jurisdictions are somewhere in the middle.
• We believe that for policymakers, key priorities will include consumer protection, financial stability, market conduct, and anti-money-laundering rules, among others, while also striking a balance that enables and fosters continued innovation in the financial markets.
• The possible financial stability implications of stablecoins are accelerating the regulatory focus.
• The lack of regulation is hampering DeFi lending growth and increasing fragmentation, in our view. We expect anti-money laundering (AML) and know-your-customer (KYC) rules and customer protection will be key for regulators, since regulatory priorities for DeFi will likely be aligned with those of traditional lending.
• Regulators face a more arduous task with Decentralized Crypto Exchanges (DEXs) than centralized exchanges because of their borderless and autonomous nature.
• An acceleration in regulatory initiatives doesn't necessarily protect traditional finance incumbents. We believe that regulations may, on balance, allow for more permeability between the traditional finance (TradFi) and DeFi worlds.

Download the report below (PDF 45 pages)

Laurent Leloup
- Fondateur et associé Finyear
- Fondateur et CEO Leloup Partners (néo-banque d'affaires©, ICO, STO, Web3)
- Auteur de Blockchain, la révolution de la confiance
"La blockchain n’est pas la révolution tant annoncée, elle n’est que l’outil d’un monde lui-même entré en révolution"
- Traducteur de La Blockchain pour les Nuls et de Au cœur du bitcoin.