INATBA Publishes Policy Notes on Crypto-asset Regulatory Sandboxes (Part 4 of 4)

INATBA is the global convener of the blockchain ecosystem, with 170+ members dedicated to promoting global adoption of blockchain and DLT technologies by bridging the gap between policymakers and industry stakeholders for mutually beneficial conversations. INATBA has 6 Working Groups, each dedicated to a specific niche within Blockchain. The Finance Working Group is set up to leverage member expertise and knowledge of DLT-based finance issues for development into policy recommendations.

INATBA and its members have, through these Working Groups, reviewed and responded to numerous regulatory proposals, including the European Commission’s Markets in Crypto-Assets regulation (MiCA). MiCA aims to provide legal certainty on the treatment of crypto-assets and crypto-asset service providers in the European Union (EU). The industry is uniquely fast-paced and rapidly evolving and, as such, demands an evolution in knowledge sharing and regulatory approaches.

INATBA’s members have produced this series of four papers to help share knowledge and encourage establishing a new form of a regulatory sandbox to develop modern, appropriate and sustainable regulatory approaches for this unique industry. The series of papers has four parts;

Together, these papers explore the fluid interchangeability of the technologies and explain how the full potential of these applications may exceed the initial scopes anticipated by policymakers. The Finance Working Group of INATBA has produced these papers for its members and for the ecosystem. The first paper, focusing on Decentralised Finance, can be found here. The second paper, focusing on Decentralised Autonomous Organisations, can be found here. The third paper, on “Non-Fungible Tokens” can be found here.

This final report focuses on Regulatory Sandboxes – what they are, where and how they operate, and why such a sandbox is needed in Europe to address Decentralised Protocols. The report shows that even after years of work on some of the most wide and fundamental policy proposals for the European and Global Cryptoasset market, one thing remains clear – DeFi, DAOs, NFTs and all truly Decentralised Protocols are still not in scope of the proposed crypto-asset regulations like MiCA.

There is a common misconception that DeFi and DAOs cannot be regulatory compliant. As the report shows, this is incorrect. The underlying technology of blockchain naturally increases the level of transparency and auditability through its characteristic open and transparent transactions on the ledger. However there are limitations that a sandbox can solve.

Feedback from the industry is welcomed. To join our work on this topic, please email us at secretariat@inatba.org.

Report co-authors: Alireza Siadat (Annerton), Axel von Goldbeck (DWF Law), Dimitrios Psarrakis (XReg Consulting), Donna Redel (Fordham University), Guido Schmitz-Krummacher (Lisk Foundation), Ismael Arribas (KUNFUD), Jan Klesla (Blockchain Republic Institute), Jean-Christophe Mathonet (FeenPOP), Joshua Ellul (Malta Digital Innovation Authority), Lorena Stanescu (Stanescu and Partners), Merav Ozair (Rutgers Business School), Nathan Vandy (Blockchain Helix), Nina-Luisa Siedler (DWF Law), Synthia Bastron (Lisk Foundation), Tom Jansson (IOTA Foundation).
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