Why are regulators nervous about cryptocurrency? A Former MAS regulator told you
“A lot of regulators are nervous about cryptocurrency for they don’t know how to regulate cryptocurrency, because it is still relatively new.”
Nizam Ismail told Jinse Finance & Cointime at the 2019 Chain Plus Asia Pacific Blockchain Summit on April 11.
Nizam Ismail now is a Co-Founder of RHT Compliance Solutions, a dedicated regulatory compliance consultancy based in Singapore, Malaysia and Indonesia. Before joining RHTLaw, Nizam have spent six years as a regulator at the Monetary Authority of Singapore, where he was Deputy Director and Head of the Market Conduct Policy Division.
Nizam is also a Fellow at the Singapore University of Social Studies, where he focuses on cryptocurrency regulations, as well as Chairman of the Regulatory Sub-Committee of ACCESS, a cryptocurrency and blockchain association in Singapore. He is also a founding member of the Global ICO Transparency Alliance.
Nizam told Cointime that the regulation to cryptocurrency is difficult. Nizam explained it. In the context of conventional financial services, there are international bodies, Nizam called them supernations, which sets best practices across worldwide financial services industry. for instance, a organization called IOSC which stands for the International Organization of Securities Commission sets global standards for securities regulations. But there is not a body like that for cryptocurrencies and the blockchain.
That’s why there are different approach to cryptos trading or even ICOs. Taking crypto trading for example, there are countries outright banned, at the same time there are other countries not really regulated.
Although it is difficult, there are lots of progresses in international regulations to cryptos. Nizam said it happened in the anti-money laundering space through the financial action task force , an international body which sets anti-money laundering policies worldwide.
US SEC had issued a new framework of investment contact last month. Nizam thinks that it is not a bad thing and quite critical because the guidance tells people whether a token will be regarded as securities under US laws or not.
Nizam have said that the definition of securities vary from country to country, so more regulators should think about issuing guidance. The industry should welcome the regulator’s guidance, because it gives clarity and transparency on how regulator think and it tells you where the line is being drawn.
Meanwhile Nizam told Cointime “it is also important for the industry to give feedback to the regulators.”
In the interview, Nizam also had talked about tokenization. Many regulators also have believed that blockchain and token can be separate in the last five years. But Nizam defied it in the interview. He give the answer quoting the words of Sopnendu Mohanty, the Chief Fintech Officer of the Monetary Authority of Singapore. Sopnendu Mohanty had said that the separation of the blockchain and the crypto is a false narrative at a G20 meeting last year.
Nizam told cointime that it is very hard to separate the blockchain and token because their values are very much linked, although they can be separated from a technical point of view. He agrees that there is a lot of value on tokenization if you want to tokenize underlying asset, fiat currency, commodity, precious metal or even art. He told cointime that tokenization have great value in terms of financial inclusion, efficiency, more customer focused and worldwide transactions because the blockchain is the technology of trust.
Executive editor： Maxwell