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“Coming together is a start, staying together is progress and working together is success” – the words of Henry Ford express the spirit of collaboration that defines human progress. His ethics around unity extends to many strands of society, including profit making, community initiatives and far-reaching government policies. When navigating in unexplored territory, such as managing technological innovation from a regulatory point of view, the different stakeholder groups must resist the urge to remain compartmentalized in their strategies and to focus on the vision from Ford for shared success.
The art of enacting legislation requires close cooperation and careful management of stakeholder interests, with external forces always having an impact on implementation efforts. We must prioritize substance rather than speed, as opposed to rushed political action that does not fully take into account the needs of industry, relevant industry groups or citizens. The variables that can be controlled by regulators should, however, be.
Absorbing industry knowledge from the very start of an extended formulation process can pave the way to success. By aligning goals and working with industry representatives, regulators have the best chance of developing legislation in a fluid and decisive way, setting the wheels in motion for sustainable growth. Of course, much of the rhetoric above is only as powerful as the anecdotal evidence that captures the benefits of such an approach.
In relative terms, the successful establishment of a framework that sets out clear principles to encompass an evolving sector is the result of a shared ambition. When it became clear that long-term technological innovation in distributed ledgers was on the horizon, the gears began to spin in commercial, academic and political circles in Gibraltar to make a fresh start in the rest of the world. .
A working group was created to bring to life a vision of DLT regulation that offered the desired levels of safety and assurance to regulators, while being aware of the conditions necessary to help DLT projects get started. Industry representation in this working group has ensured that, collectively, we are moving regulation in the right direction, providing a regular path to the market for quality blockchain projects.
Although industry-government collaboration is the foundation for the successful implementation of new regulatory policies, this approach can be applied to legislative renewal efforts. Earlier this year, Gibraltar’s legislative reform program provided another example of a coordinated approach between key stakeholders to facilitate compliance within an existing body of law.
While legacy legislation must be respected, opportunities for legislative renewal must be seized, facilitating a confluence of regulatory and industrial discussions. It should not necessarily lead to a complete overhaul of regulations, but it does pave the way for legislative assessment, allowing for a broader discussion of the benefits and barriers associated with a particular policy or framework from a policy perspective. industry.
The Autorité des marchés financiers, or AMF, recently called for the creation of a regulatory sandbox to study the impact of security tokens in the European Union – a measure that would give regulatory latitude to ease constraints of certain security token projects. This illustrates how problematic the misalignment between existing legislation and new innovations can be, but it also shows how regulators can be catalysts for innovation by easing legislative restrictions for transitional and temporary exploration phases.
Regarding DLT exploration and blockchain-based financial instruments, a certain degree of regulatory leeway is necessary to support the development of new solutions without regulatory reprimands. A sandbox, as proposed by the AMF, would act as a microcosm of how new technological innovations and financial solutions can be nurtured by regulators in a safe environment, coupled with industrial and regulatory oversight.
To echo the feeling of Henry Ford, the meeting of regulators and personalities from the sector is a positive and necessary preliminary step, the maintenance of this open dialogue is progress, but the tangible results from collaboration and coordination are the true mark of success. In times of economic uncertainty, this vision takes on a more pronounced meaning and reminds us that our collective efforts are more profitable for society in general.
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