Global cooperation key to better blockchain regulation: Ripple’s Swell 2018
Ripple’s flagship event Swell 2018 held over the last couple of days saw several top names from finance, technology, banking, and politics come together to discuss blockchain technology. An important topic of discussion was the regulation of cryptocurrencies and blockchain and how it should be modified to ensure smooth functioning of the industry.
— Ripple (@Ripple) October 2, 2018
Sunil Sabharwal, alternate executive director of the International Monetary Fund (IMF), stressed on the importance of blockchain in remittance transfers.
“In cross-border payments, business to business payments is about $150 trillion dollars. Remittances — that’s about $240 billion in revenue. Remittances, mostly person-to-person payments by migrants, is about $500-600 billion a year,” he stated, highlighting how blockchain can revolutionize this industry.
He also mentioned that the reason many countries don’t view blockchain favorably is the high risk and high costs imposed on affiliated banks, despite the presence of a viable market. He went on to list the main hurdles faced by the industry: regulatory costs, compliance costs and corresponding fines or associated risks.
According to him, global cooperation is an issue. “First the companies need to cooperate, and there are geopolitical issues in getting countries to come together and share their approaches to cyber threats, as it relates to cryptocurrency. The second is a lack of training,” he stated.
Sabharwal also stressed the importance of apex banks and national regulators complying with the required anti-money laundering laws, an issue of contention at the IMF.
Representatives from central banks also chimed in, adding that blockchain technology could help solve the problem of international money transfers for both regulators and burdened financial institutions.
Marcelo Yard, CIO of Banco Central do Brasil, explained that Brazil’s central bank had a more favorable perspective towards blockchain.
“Blockchain and distributed ledger technology (DLT) is a kind of tool for us to solve things. We’ve seen good things with blockchain and DLT in knowing our customers and in exchanging information inside the Brazilian financial system, and we’re seeing good things in cross-border payments,” he said.
Mohsen Alzahrani, from the Saudi Arabian Monetary Authority, also voiced his support for the use of digital currency in cross-border payments. Alzahrani mentioned that a proof of concept had been tested by the country's central bank to facilitate payments.
“Using a settlement coin, a kind of currency that can settle between two different fiat currencies is our idea of exploring the technology,” he added.
“We see a lot of promise in the technology, and it’s almost like it is maturing. The technology is no longer the question mark,” said Andrew McCormack of Payments Canada, a payment clearing and settlement facilitator.
Image via Shutterstock
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