Digital assets add complexity to an already complex global financial system. Jurisdictions around the world are adopting measures to respond to ongoing developments. As activity grows, bespoke legal regimes are either in place, in development, or under discussion around the world. Regulatory interest now extends beyond token offerings and exchanges to include stablecoins, decentralized finance (“DeFi”), non-fungible tokens (“NFTs”) and decentralized autonomous organizations (“DAOs”). In this article, we take a bird’s eye view of the global state of digital asset regulation. While some countries have adopted a hostile posture, most regulators are attempting to balance concerns about potential harms against potential benefits. Despite concerns about uncertainty and fragmentation, the regulatory environment is gradually adapting to the novel challenges of digital assets and blockchain-based financial services.

By Bianca Kremer & Kevin Werbach[1]

 

I. Introduction

The financial system has become increasingly global and intertwined over the past century. While this has produced tremendous benefits, it also raises the stakes on the risk side of the equation. Higher volumes, greater velocity, and increasing sophistication of financial engineering open opportunities for unintentional crashes as well as intentional manipulation. And failure in one market can ultimately have cascading effects into others. More digital and global money also raises the st

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