Why more oversight is needed for digital assets
Joanne Kane, Chief Industry Operations Officer, at the Investment Company Institute, discusses what action needs to be taken to protect the public from misuse of digital assets in the wider investment market.
Fund Operator Editor POSTED ON 11/16/2022 8:05:13 AM
The sheer quantity of US citizens coming into close contact with digital assets -- despite little education and even fewer laws -- means that the industry must welcome more government oversight.
These were the personal views of Joanne Kane, Chief Industry Operations Officer, at the Investment Company Institute, who said the US government must offer more legislation.
In Clear Path Analysis’s recent report, Fund Technology, Data & Operations, North America 2022, industry leaders from companies including Capco, Lamar Associates, and Pzena Investment Management, as well as Kane, look at the best ways fund operators can keep abreast of new regulations and where they need to be aware of gaps in protection.
Kane said this area is one that the Investment Company Institute is watching very closely and hopes for further work to be done on the topic.
"“I personally feel that the regulators need to step up and that the regulators and federal government need to understand all aspects of digital assets and the underlying technology,”
“As an organisation, we were very pleased to see President [Biden’s] Executive Order back in March directing the government agencies to take a hard look at crypto currencies in general and to consider the possibility of a central bank currency for the US,” she explained. The measure called on the wider US federal government to examine the risks and benefits of cryptocurrencies.
“I personally feel that the regulators need to step up and that the regulators and federal government need to understand all aspects of digital assets and the underlying technology,” she said when asked about what crypto issues fund operators needed to be more aware of. “From a personal perspective, this is a huge area. More than 40 million Americans have touched crypto in some way without there being any real regulation in place.”
“The balance between encouraging entrepreneurial cryptocurrency ventures and discouraging criminal activities leveraging cryptocurrencies seems to have shifted somewhat.”
In October this year, the Brookings Institute said that there were “competing priorities facing US crypto regulation”, and that work being done – including the Biden administration's call to arms in March – was ineffective as the government itself didn’t know what it wanted from crypto/digital assets.
“In the past year, the balance struck by the US government between encouraging entrepreneurial cryptocurrency ventures and discouraging criminal activities leveraging cryptocurrencies seems to have shifted somewhat,” said Brooking’s report. “[This is] due both to the volatility of the virtual currencies themselves as well as the growing concerns about the types of crimes enabled by those currencies.”
Kane believes that digital assets are here to stay, and that legislation must catch up. “Think about the value of real time payment and settlement – that would have an enormous impact on our industry but there are also significant considerations/risks that need to be solved including investor protections, investor education, AML, and having the right regulatory infrastructure in place,” she said.
For fund operators, wading through legislation could be a long-term strategy if crypto remains lucrative.
To read the interview with Kane in full, and see more from the report, please click here.
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