Finance is built on trust, trust for infrastructure, trust for companies, trust for people. The emergence of cryptocurrencies and blockchain technologies is to build a financial world with more efficiency and transparency, with the underlying infrastructure as a global trusted ledger. If we go back to the initial design of Bitcoin, it was targeted to build a peer-to-peer payment system. For Ethereum, it is targeted to be a smart contract platform for decentralized applications.
Each jurisdiction has its unique approach to regulating cryptocurrencies and asset tokenization. Generally:
- Hong Kong and Singapore focus on a balanced approach that encourages innovation while ensuring investor protection and market integrity.
- The US has a more fragmented regulatory landscape, with multiple agencies regulating different aspects of crypto assets.
- The UAE offers tailored regulatory frameworks within its financial free zones, fostering a regulated environment for digital assets and tokenization.
- The BVI has a clear system which relies on existing securities laws to govern security tokens in addition to having a VASP Act to govern virtual assets services.
- The EU, with MiCA, is moving towards a harmonized regulatory framework across member states, focusing on consumer protection, market integrity, and financial stability
The tokenization of currency not only brings cost reduction and efficiency improvements to payment systems but also achieves programmability and automation through smart contracts. This technology can provide more innovative, transparent, and faster solutions for complex financial transactions, with the global public sector undertaking related projects on a large scale.