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Digital-asset leaders call for regulatory harmony between fintechs and banks

digital assets regulationThe head of State Street Digital, Nadine Chakar, has called for more clarity from global regulators on rules for digital assets.

Chakar was speaking during a Funds Europe webinar that examined how digital assets may transform the funds industry.

There was a broad consensus among the panellists – which also included Jeroen Van Oerle, a fintech portfolio manager at Lombard Odier - that regulation could be a decisive factor in the development of the digital assets market.

However, there were also diverging views on how rules are currently applied to both traditional market participants and digital newcomers. 

Funds Europe’s ‘Digital transformation of the funds industry’ webinar featured representatives from both the old and new investment worlds. 

Alongside Chakar and Van Oerle were Adam Belding, chief technology officer at funds processing network Calastone, and Lex Sokolin, global fintech head at Consensys, a blockchain software company set up by ethereum co-founder Joseph Rubin.

Sokolin outlined just how much he believed digital assets had already changed the investment world, with billions of investment moving away from traditional to new asset classes. 

“There is now an internet for all financial services and products that is rearchitecting how we pay and how we invest,” he said. 

Sokolin also argued against the idea that the unregulated crypto world is more liable to fraud than other areas of finance. “If you look at the data, it is inaccurate to say that crypto networks are more fraudulent or used more nefariously than our actual banking industry,” said Sokolin.

However, according to Van Oerle, it is not about whether criminal activity is taking place but instead ensuring there is a level playing field between the “super regulated” traditional players and digital newcomers. 

“Competition between traditional financials and these new types of firms is actually not fair at this point in time,” said van Oerle.

He cited the fact that for a regulated entity like Lombard Odier to tokenise assets, there is typically a complex process that involves the creation of a special purpose vehicle.

Calastone’s Belding argued that regulators could benefit from blockchain technology and the transparency it provides. “The technology potentially provides the solution as well as the problem.”

Chakar also outlined her hope that well-established service providers may play a role in bridging the digital divide. 

“At some point, the old world and the new world will have to [come] together in harmony,” said Chakar. “State Street wants to help our clients manage that digital divide but I am more than cognisant that banks like us, that are more than 200 years old, have to demonstrate to the world that elephants can truly dance.  

“That will require a totally different mindset from the banking industry, asset managers and regulators and we all have to be a little bit more humble and curious,” added Chakar.

 *The full webinar can be heard here (scroll down).

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