Finance Monthly. F i nanc i a l Innov a t i on & F i nTech 61 2022 was full of worrying crypto news – media reports suggested that the entire crypto ecosystem was on the brink of disaster and naysayers lined up to declare that the currencies had reached the end of the road. There is no denying that last year seriously damaged crypto’s image. 2023 is therefore going to be an important year for the sector – there’s an urgent need to reinvest in trust and transparency. Reaffirming the soundness of the underlying technology will also be essential if confidence is to be re-established. Putting regulation first The good news is that this is already starting to happen, partly as a result of a resurgence in principles-first thinking and partly due to growing awareness that objective regulation can be an ally, not an enemy. For example, the Markets in Crypto Assets Regulation (MiCA) – the crypto legislative package that the European Union finalised in October and President Biden’s Executive Order on Ensuring Responsible Development of Digital Assets, will both help build trust, a prerequisite for any currency. However, developing effective and proportionate governancewill remain challenging because of the speed with which the crypto world continues to evolve. Keeping pace with this will doubtless stretch the knowledge and resources of regulators. In this sense, it is vital that core companies in the crypto industry engage proactively with regulators to help fill this knowledge gap and ensure incoming regulations are compatible with the space. There are also questions around priorities. Does consumer protection take the top spot or
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