Guiding Principles
We are often asked how the Global DCA is able to bring together and achieve agreement amongst such a broad-based and diverse membership base when crafting standards, designing educational offerings and – in particular – when developing policy positions. The answer is that we start from a point of ‘Guiding Principles’ which help bring diverse viewpoints around the table to synthesize an organizational perspective. Our five ‘Guiding Principles’ are outlined below:
The Global DCA believes strongly in the concept of balanced regulation – regulation which balances the need for innovation in the industry with the need to protect consumers, stakeholders and the general public.
We believe that blockchain and digital assets are a transformative technology that will fundamentally shift the global financial sector. Digital assets are not just another fintech or technology that we can view through the narrow scope of financial sector regulation. But given their transformative nature and the evolution of this space must be viewed through the following four lenses:
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National Security
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Economic Growth / Job Creation
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Financial Sector Evolution / Global Positioning in the Digital Era
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Sustainability – Environmental as well as financial inclusion, access to finance and other social outcomes
By taking a holistic approach to understanding digital assets, we believe national jurisdictions may most appropriately devise policies, structure legal and regulatory frameworks and properly position themselves in the global digital economy.
So what is the correct legal and regulatory approach to digital assets? This will vary by jurisdiction, but generally, the Global DCA believes in a right-sized approach to government regulation complemented by a credible and robust system of self-regulation. This combination of regulation + self-regulation will allow greater overall regulatory coverage for the industry and individual jurisdictions and will help to strike the balance between the need for innovation and consumer protection.
This industry, more than any in recent memory is best suited to self-regulation as:
- RAPID EVOLUTION – We are dealing with a rapidly evolving industry which requires a swift and nimble approach to the regulation.
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HIGHLY TECHNICAL – This industry is highly technical and requires significant expertise that is even difficult to find / maintain / retain in the private sector – let alone the public sector.
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NEED FOR PROXIMITY – Further, the combination of rapid evolution and required expertise to effectively regulate necessitates a high degree of proximity – such as that found in self-regulatory regimes – to the digital asset industry. Given the swiftness with which innovation is being undertaken in this space – an expert removed from the industry’s knowledge could easily become obsolete in a short period of time.
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GLOBAL – Finally, the construct of the digital asset industry very naturally transcends borders. It is truly borderless and global. Given the need for cross-border, global harmonization and engagement to regulate – there is a need for a self-regulatory entity which can more easily follow the flow of transactions.
As such, a self-regulatory approach makes the most sense in terms of providing effective and efficient regulatory coverage for this industry.
Global DCA Policy Positions
Leveraging our ‘Guiding Principles,’ the Global DCA undertakes member and partner association roundtable seminars, engages with stakeholders and considers the public interest in crafting its policy positions. Global DCA policy positions, comment letters, statements and responses are provided below:
Global DCA Comment Letter to H.M. Treasury on U.K. Regulatory Approach to Cryptoassets and Stable Coins
“Creating a regulatory environment in which firms can innovate, while maintaining the highest regulatory standards so that people can use new technologies reliably and safely is especially crucial as the UK seeks to maintain its leadership position as a global centre of excellence for fintech firms in the digital era and attract and retain investment post-BREXIT. Moreover, the industry participants recognize that the current post-Brexit era may create significant incentives for the UK to take a global leadership role in the development of a regulatory framework that will provide the digital assets industry with clear directives and regulatory requirements, allow for ongoing industry engagement in the evaluation of applications as well as the development of standards, and finally include a data-driven assessment process.” – Global DCA Read Response Letter
Global DCA Comment Letter to FinCEN on Proposed Rule for Transactions in Convertible Virtual Currency and Digital Assets
“While the GDCA fully supports protecting U.S. national security and acknowledges the concerns surrounding unhosted wallets raised by FinCEN, we suggest […]to focus on the source of funds and the concept of “Know Your Customer” during the KYC/AML onboarding and monitoring process instead of focusing on the means and in effect penalizing a specific technology solution that is believed to be utilized by bad actors. The GDCA questions whether applying extensive reporting, verification and recordkeeping requirements on the holders of self-hosted wallet solutions is the most effective approach to capture illicit activity and suggests that closer consideration should be given to the source of funds and the risk profile of a customer or a counterparty while evaluating transactions in digital assets.” – Global DCA. Read Response Letter
Global DCA Proposal to SEC on Amending the definition of “Accredited Investor”
“…amending the “accredited investor” definition to more broadly permit professionally qualified or industry certified individuals to participate may better protect investors and the public interest. When investors are well-informed and capable of making sound investment decisions, they are better able to allocate their resources in the market, ensure sound investment decision-making, and contribute to financial sector and economic growth. As such, the benefits of better educated and qualified individuals participating in investment activities may not only provide additional protection to the investors themselves, but may benefit the overall stability of the financial system as well as the broader economy.” – Global DCA. Read Response Letter
