Letters: Time for some regulation
[Re: Fund managers call for FCA blockchain taskforce in plans for ‘Investment Fund 3.0’, July 7]
The complete absence of regulation in the face of technological innovation is the worst of all worlds. The Investment Association’s report is right to call for the legislative and regulatory authorities to step up their efforts in determining how the burgeoning Decentralized Finance landscape be regulated.
The current absence of clear guidelines is twice damaging. First, regulatory uncertainty means that many VCs, established companies, and startups are hesitant to make serious investments in R&D initiatives or launch new products as they are afraid of possible regulatory crackdown coming in the future.
Second, it means that many of the companies that have launched are the ones that don’t mind operating in a grey legal area, which sometimes coincides with them exploiting this convenience to the detriment of the consumer. We’ve already seen this with the blow-up of the stablecoin Terra.
By providing clarity on how it intends to regulate decentralised finance, the UK would gain on both sides: providing an environment in which serious companies are comfortable investing and consumers are protected.
The UK must now work to find the perfect regulatory environment which protects the consumer without killing innovation. That will be the challenge for them in the coming months.
Quentin Vanderweyer