Source: Cointelegraph
Original: “The Necessity of Cross-Border Collaboration to Promote the Development of Digital Assets”
Author: Elise Donovan, CEO of BVI Finance
Digital assets are on the rise. With the surge in market value, there is a general expectation that regulation will take a more lenient approach. This trend is driving mainstream adoption, including a pilot program launched in the UK for issuing digital government bonds, as well as a plethora of exchange-traded funds (ETFs) introduced by global asset management companies.
Momentum Growth
As this growth momentum is unlikely to weaken in the short term, the rise of digital assets will drive the demand for a deeper and more complex global financial ecosystem to support its expanding use cases. This, in turn, creates opportunities for jurisdictions that can meet the needs of new decentralized finance (DeFi) businesses.
Like any innovation in the financial services sector, coupled with the rapid development of the digital asset industry, growth must be accompanied by a focus on risk mitigation.
International financial centers have an advantage in supporting these businesses due to their multinational, decentralized, and agile characteristics, and thus regulators are taking a cautious, risk-based approach to regulating digital asset businesses. Collaboration and the sharing of best practices will be key to reducing the impact of bad actors and mitigating the reputational damage caused to relevant jurisdictions by incidents such as the collapses of FTX, Three Arrows Capital, and Genesis.
International Appeal
In recent years, the number of licensed virtual asset service providers in international financial centers has surged. Many jurisdictions have demonstrated their regulatory strength, making them ideal locations for digital asset enterprises.
Take the British Virgin Islands (BVI) as an example; the region has created a favorable environment for fintech innovation through legislation. With laws such as the Virtual Asset Service Provider Act (VASP Act), regulators have adopted a strict yet business-friendly approach to overseeing digital assets. Since the VASP Act became official law in 2023, the BVI has received over 80 license applications from digital asset enterprises. Additionally, the region's regulatory sandbox allows businesses to pilot innovative financial service solutions, opening new possibilities to address the industry's digitalization needs.
The BVI has also implemented robust measures to combat financial crime and prevent various enterprises, including those in the digital asset industry, from abusing the financial system.
For instance, the Financial Investigation Agency and the Financial Services Commission have strengthened their internal expertise on digital assets and hired specialized analysts. These measures taken by the BVI aim to provide a safe and attractive option for international businesses.
Indeed, creating a secure center for DeFi enterprises to operate is crucial, but it cannot be done in isolation; international collaboration and global initiatives are equally important.
Collaboration in the Caribbean and Beyond
The standards set by the Financial Action Task Force (FATF) for virtual asset service providers (VASPs) exemplify the international community's joint response to the rapid growth of the market and the need to ensure that digital assets are not used for global money laundering and terrorist financing. As a leading member of the FATF's regional body in the Caribbean, the BVI is actively promoting this progress. It is vital that each jurisdiction takes seriously the issue of providing a platform for the digital asset industry.
Of course, there is still much work to be done, especially at the regional level. The European Markets in Crypto-Assets Regulation (MiCA) has established unified EU market rules and has made progress in collaborating with neighboring countries. It sets an example for other regions, including the Caribbean, indicating that a unified collaborative approach should be adopted to embrace financial innovation.
In October 2024, the financial services community will gather at the Caribbean Regional Compliance Association Conference to discuss how to formulate innovative yet moderate regulations that balance growth and safety. Overregulation can stifle innovation, but thoughtful regulation across the region should aim to prevent financial crime and effectively identify bad actors.
Addressing these issues requires a robust regulatory framework, technological infrastructure, and capable professionals to enforce compliance. These resources must be shared among jurisdictions; otherwise, even the most well-designed regulatory systems may fail due to a lack of technical and institutional support.
In fact, technological advancements in the financial services sector's ability to combat financial crime, especially in digital assets, have significantly improved due to innovations like artificial intelligence. While AI cannot fully replace human expertise, it can significantly reduce the time spent on repetitive manual tasks, allowing professionals to engage more in investigations, customer due diligence (KYC) processes, and communication with compliance personnel from other jurisdictions. Moreover, the importance of ongoing education and training for professionals in the regional financial services industry will not diminish due to technological advancements.
DeFi has immense potential in the Caribbean. The entire region must remain committed to high standards of financial integrity and transparency. Otherwise, the goal of establishing an attractive and secure business environment may be undermined.
Author: Elise Donovan, CEO of BVI Finance.
Related: Intent-based solutions are expected to break the DeFi liquidity deadlock.
This article is for general informational purposes only and does not constitute legal or investment advice. The views, thoughts, and opinions expressed in the text are solely those of the author and do not necessarily reflect or represent the views and positions of Cointelegraph.
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
