Clarity And Innovation

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In a nascent industry, the speed to regulatory clarity matters. Put simply, the quicker we get to clear(ish) legal footing for innovators in the digital currency sector the more we can expect to see innovation really take flight.

Although the above may be a gross oversimplification of the impact regulatory clarity can have (see Uber as a counterpoint — an example of regulatory change by force majeure), an ability to experiment within clearly defined legal bounds is an important factor in building next generation industries — like the blockchain tech and digital currency sector.

Although, I’m not a fan of countries building race to the bottom regulatory arbitrage positions, clarity and the removal of unnecessary regulatory friction can have an impact on the number of startups building innovative solutions to problems.

More recently we’ve seen many countries adopt more progressive approaches to regulation in highly regulated markets. For example, a growing trend for financial regulators has been to build financial licencing ‘sandbox’ regimes. Interestingly, when the UK’s FCA ran their first batch of ‘sandboxed’ startups 50% were blockchain companies.

From an Australian perspective, I anticipate that this year will bring further clarity for digital currency and blockchain tech businesses. With promising signs of support from Treasury on the removal Goods and Services Tax on digital currency transactions, further clarity around AML/CTF treatment of digital currencies from the AG and the introduction of a sandbox regime in Australia we could become a very promising place to base a digital currency or blockchain tech company from.

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