GDF in Q1: Roundup Letter
A busy start to the year
We are only a quarter of the way into 2022, and already the crypto and digital asset industry’s landscape has changed considerably. Even before world-changing events in Europe, we started the year with a fresh momentum from regulators and policymakers focused on the cryptoasset sector, whether issuing statements, regulatory proposals, or bans.
GDF called for policymakers and agencies to further engage with the industry through the GDF co-regulation model, and for industry and agencies to collaborate on the identification, analysis, and mitigation of risk in the sector.
For the second year running, our Member Survey revealed that inconsistent or unaligned cross-border regulatory guidance, and a lack of clarity on the regulatory perimeter were the top regulatory challenges for the community.
GDF will work this year to address this, with a particular focus on the top priority areas: DeFi, Custody, and KYC/AML.
In February, we published the 2021 Annual Report, Digital Money and Nextgen Market Infrastructure: Macro And Regulatory Headwinds Prevail, with insights from the US Securities Exchange Commission, FSB, IMF, OECD, as well as insightful contributions from members, and updates from our working groups.
Expanding Our Team of Regulatory Experts
With regulatory headwinds in mind, we continued to expand our regulatory team and the team of advisors. Andrew Smith joined us as Regulatory Affairs Director for the U.S. and the Americas, joining Lavan Thasarathakumar as Regulatory Affairs Director for EMEA. Dina Ellis Rochkind, Of Counsel in the Paul Hastings Government Affairs practice, joined the GDF team as U.S. Policy Director.
Andrew and Dina join the U.S.-based GDF board members Jeff Bandman and Sandra Ro, as well as U.S. Policy Directors Melissa Netrum and John Collins, to continue to strengthen GDF’s presence and advocacy initiatives on the ground.
Greg Medcraft, former Director of the OECD Directorate for Financial and Enterprise, was appointed to the Board of Directors as a non-executive director.
Forums, Summits, and Roundtables
The GDF Regulators Only Forum convened global regulators, policymakers, and supranationals to discuss their current focus. Throughout February, GDF members gathered in jurisdiction-specific roundtables in order to drill down into the specific priorities for engagement in each area and help shape the GDF strategy for 2022.
The GDF Global Summit for Q1 was once again held in two time-zones: first Asia-Europe, chaired by Lavan Thasarathakumar, and then the US-Europe Summit, hosted by Lawrence Wintermeyer. The Summit featured read-outs from BIS, FSB, OECD, as well as updates from the GDF team.
Ukraine Crisis and Sanctions
The Russian invasion of Ukraine shifted our attention and priorities. This was true on a global scale, but as an industry, the crypto and digital asset community entered into a new chapter.
We witnessed unprecedented sanctions from governments around the world, and a united, cross-industry, cross-jurisdictional effort against Putin’s regime. Crypto became a focal point as a potential tool for evading sanctions, and the crisis triggered a further acceleration of regulatory focus on the sector.
GDF mobilized the community to respond, and, just as Europe announced that they would ban several Russian banks from SWIFT on 2 March, we held an Emergency Summit on Sanctions.
The Summit convened both industry and policymakers to discuss the nature of the sanctions, the challenges that the crypto and digital asset sector would face, and how the industry can put its best foot forward to be on the right side of history in this crisis.
We launched the Sanctions Hub as a central resource for industry guidance and tools on sanctions. We also launched the Sanctions Working Group, co-chaired by Ari Redbord, TRM Labs, and David Carlisle, Elliptic. The group will work on developing the Hub, and develop a vignette for regulators and policymakers on the operational components of compliance for crypto and digital asset firms.
Overall, the GDF community is clear that although sanctions evasion may be limited in crypto, agencies and industry must work together to ensure that networks are not misused, and demonstrate how digital assets can be part of the solution.
To join the Sanctions Working Group or add your resources to the Sanctions Hub, contact [email protected]
Consultation papers and policy announcements
The GDF team, working groups, and wider community were busy responding to the many regulatory consultations and statements issued in the first quarter of 2022:
- HM Revenue and Customs (HMRC) updated it’s cryptoassets manual to include DeFi. Read the full outline from Lavan Thasarathakumar here
- FCA issued a consultation paper on financial promotions. Read GDF’s full response to the FCA here, and letter to HMT on addressing key concerns here
- The MiCA working group mobilized to ensure the Rapporteur removed references to phasing out specific consensus mechanisms. Read more on GDF’s work on MiCA here
- President Biden’s signed an Executive Order on Ensuring Responsible Innovation in Digital Assets. GDF welcomed the seminal initiative and stands ready to support the agency work as they study and build a regulatory framework.
- European Parliament moved to place complicated requirements on unhosted wallets. GDF’s letter outlined the need to take a proportionate approach on unhosted wallets. Read the full letter here
- The KYC / AML working group responded to the HKMA Stablecoins consultation paper Read the full response to the consultation here
Membership and Community
The GDF membership has continued to grow, with Alvarez and Marsal, Banksly, BCB Group, PayED, RPM Financial Markets, and Fiat Republic joining in Q1. We also welcomed Gate.io as a new Patron Member.
Members including Solidus Labs, UDHC took part in FintechTV’s Digital Asset Reports, hosted by Lawrence Wintermeyer, Abdul Haseeb Basit, and Anastasia Kinsky.
As well as the Sanctions Working Group, the Global Financial Institutions Cryptoasset (GFIC) working group kicked off their first meeting. The group is focused on enabling financial institutions (FI) to scale up institutional crypto adoption and growth, establish trust between FIs and regulators globally, and promote an efficient and innovative global cryptoasset ecosystem.
To join the GFIC Working Group, contact firstname.lastname@example.org
GDF were partners in Juliet Media’s Digital Asset Week in California in March. Focused on the continuing realization of digital assets across the finance ecosystem, Emma Joyce and Lawrence Wintermeyer were both speakers, alongside appearances from GDF Members.
The team convened once again at the CryptoCompare Summit at the end of March, in which Anastasia Kinsky hosted a panel discussion on crypto regulation. Lavan Thasarathakumar was in Dubai at the World Government Summit, speaking about CBDCs.
In Q2, GDF will continue to build up its regulatory outreach and advocacy on behalf of the crypto and digital asset ecosystem. Look out for further regulatory consultation responses, the publication of the DeFi Report, the Sanctions Vignette, and the APAC conference later this month.