This article was first published on Insights – Ripple
In episode seven of the Block Stars podcast, Ripple CTO David Schwartz is joined by Ripple General Counsel, Stu Alderoty to discuss the current state of global cryptocurrency regulation.
David probably didn’t expect Ripple’s Chief Legal Officer to reference Beanie Babies during their conversation, but the often-valuable stuffed toys are a great analogy for why not every digital asset is a security.
The UK’s Financial Conduct Authority (FCA) categorizes digital assets according to their primary use case, with tokens designed for exchange of value, utility tokens for specific products and services and security tokens that represent a stake in a business. But only the latter are subject to securities regulation.
“The UK recognizes that some people may buy an exchange token…or utility token…for speculative purposes,” explains Stu. “The analogy would be somebody buying …Beanie Babies hoping that those things may increase in value. That doesn’t make a Beanie Baby a security. It makes a Beanie Baby a Beanie Baby. You may give it to your son or daughter as a gift, or you may…keep it in the attic, thinking that the Beanie Baby market’s going to increase at some time.”
For Stu, the clear regulation seen in the UK and other countries including Japan, Singapore, Switzerland and the United Arab Emirates helps promote innovation in the blockchain.
“The days of Silk Road…the Wild West days of crypto…are behind us,” Stu says. The industry is now driven by “responsible actors who want to cooperate with regulators…to get to a smart, regulatory framework…that protects customers [and] the integrity of the market, but also allows the industry to evolve.”
He is concerned that the United States is falling far behind those other countries. Ultimately, the problem in the U.S. may be that cryptocurrency has principally been regulated through ...
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