Could we possibly live in a world devoid of rules? Yes, in theory - we can survive without government, as our forefathers did. At its most extreme, this is referred to as anarchy - a state of lawlessness and disorder.

In reality, humans have discovered that regulations are critical to the development of a harmonious society. To foster a positive culture, we require structures and rules.

Elinor Ostrom, a Nobel laureate economist, observed that when people are required to manage shared resources such as land, fisheries, or irrigation water, they spontaneously construct rules.

Indeed, we have seen throughout history that every evolving industry undergoes a process that concludes, to a greater or lesser extent, with regulation. The most heavily regulated industries are those with the greatest potential for harm.

Consider the pharmaceutical industry, which is now heavily regulated to ensure that people around the world can rely on affordable and safe medications to protect their health. Prior to regulation, you had opportunistic con artists peddling fraudulent cures to the public.

Education is another sector where regulation ensures that the same high standards are adhered to by all institutions in order to foster trust. Food supply and hygiene are also strictly regulated to ensure the provision of a basic human need. Regulation has benefited these industries and countless others.

This debate is currently raging around cryptocurrency. Elon Musk, CEO of Tesla, was recently asked whether the US government should be involved in crypto regulation. 'I believe it is impossible to destroy cryptocurrency, but governments can stifle its advancement,' he said. 'I would advise you to 'do nothing.'

The entire crypto world is motivated by a single word: liberty. Simply the fact that governments cannot access your wallet is a significant victory for liberty.

This is not to say that crypto should be used for criminal purposes or that its image should be tarnished as a result of a minority using it for money laundering or crime.

This is especially true in emerging markets, where we must safeguard both the system and consumers. Consider employment rights in countries such as Cambodia, which would undoubtedly deteriorate in the absence of robust regulatory frameworks. Regulation acts to promote economic growth and liberty in this instance.

As a result, ensuring that the industry is transparent, clear, and compliant with the law is critical to preserving freedom.

As such, I am a firm believer that cryptocurrency should be regulated. Additionally, I believe that the industry should take the initiative – and place a premium on the positive impact that regulation can have.

Why?

Because, up to this point, crypto has been the new Wild West - and if we want to change that and become a respected financial framework, we must accept that regulation is a necessary part of maturing.

Binance flouted regulation for an extended period of time, and the result is that it is now banned in a number of economies while allegations of tax evasion and money laundering are investigated. Regulation will inevitably occur as our industry matures – so let us embrace it. There are those who want to completely regulate the industry, prohibiting financial institutions from dealing in cryptocurrency, and we play into their hands by refusing to come to the table and act responsibly.

Consider the case of technology companies. GDPR and similar laws were enacted in response to the fact that tech companies were harvesting data without restriction. They are now bound by an imposed framework and face severe penalties if they fail to comply with regulations. If technology companies had acted more responsibly with regard to customer data and regulators, the imposed restrictions could have been significantly lighter.

This is because, when left to their own devices, regulators err on the side of restricting liberty. Collaboration with regulators is critical to preserving liberty. Effectively, liberty is a matter of choice. Previously, businesses had complete control over how they used data. That option has been eliminated.

Dialogue with regulators is necessary to safeguard this option. If our industry is to advance, there is only one path forwards - we must assist governments in shaping regulation.

Attempting to conceal this fact is childish and irresponsible in the eyes of employees, partners, and consumers alike. The problem with burying your head in the sand is that one day you will awaken to discover that the world has changed without you, and most likely not in the way you desired. Rather than adjusting, it is far preferable to shape this shift.

We, as industry pioneers, should act as system custodians, preventing system abuse and protecting consumers. On the other hand, regulation without practitioner input can result in errors and misjudgments, unintended consequences, and risk. After all, we are far from the first industry to have existed without regulations. Twenty years ago, only a few countries incorporated the term 'internet' into their legislation. Today, the majority of legal systems have evolved to accommodate the new connected world. Cryptocurrency will follow the same path, whether we like it or not. The critical point is to lead this process and ensure its success. Thus, the only way forwards is through dialogue, discussion, and debate fuelled by informed opinion.

This will entail liaising with policymakers in the United Kingdom, the European Union, and the United States, as well as governments in other parts of the world where mining and crypto processing are currently located.

Thus, what would constitute sound regulation?

Cryptocurrencies are largely unregulated in the European Union at the moment. The European Parliament is considering the European Commission's proposed Regulation on Markets in Crypto Assets (MiCA). It will be incorporated into the EU's Digital Finance Strategy and is expected to have a significant impact on the operation of the EU's crypto market.

Again, it is beneficial for experts to assist in shaping this regulation. Naturally, we must ensure that cryptocurrency does not serve as a haven for money laundering, criminal funds, or other nefarious activities.

The World Economic Forum's Global Future Council on Cryptocurrencies is doing some interesting work in this area, as evidenced by its paper Navigating Cryptocurrency Regulation: An Industry Perspective on the Insight and Tools Required to Shape Balanced Crypto Regulation.

The Kalifa Review of UK FinTech correctly recognises that FinTech is not a niche or sub-sector, but a pervasive technological revolution that is permanently altering how finance works. Additionally, it frames this industry's development in terms of trust and the necessary foundations of leadership, regulation, and the rule of law.

Some green principles addressing crypto's carbon footprint are likely to be included in future regulation, which is entirely appropriate - we need to ensure that cleaner technology and energy sources are used to ensure the sustainability of next-generation finance. Crucially, we do not have to regard regulation as inherently dangerous.

Part of the issue is that because crypto is a disruptive technology, the individuals involved tend to be unconventional thinkers who dislike being bound by rules.

Others are protectionist, fearful of their profits being eroded by mainstream attention. Fear does not drive human advancement; however, it prevents us from realising our full potential.

To be truly clever, we must overcome this natural reaction and embrace the benefits of regulation - because regulators are not always opposed to financial development. By and large, they recognise that this is a genie that cannot be contained and must instead be tamed and transformed into a friend.

European regulators have expressed support for blockchain technology and its potential for digital transformation in the finance sector, both at the EU and national levels. The stated objective of this regulation is to establish a regulatory framework that is conducive to investment and growth.

And this is where governments and cryptocurrency pioneers agree: growth benefits everyone.

We can anticipate regulation promoting consumer and investor protection, market integrity, and financial stability, thereby increasing the sector's legitimacy. This synergy will attract new investors and accelerate crypto's mainstream adoption.

This will eventually result in an increase in the sector's legitimacy. As a result, the most profitable operators will rise to the top, while shady competitors will disappear from the market.

Regulation is the next frontier for cryptocurrency – it is a defining feature of our industry's success. We should not fear regulation, but rather embrace it as the next stage of crypto development concludes.

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