Beyond Skepticism and Towards Solutions

Michael Coletta, Head of Blockchain & Emerging Tech Innovation and Strategy, London Stock Exchange Group

Originally published in the GDF Annual Report 2020

The COVID pandemic brought important pause and perspective across the board, and while governments, businesses, and citizens looked for any solution to the litany of issues faced, technology and innovation came bubbling to the surface with solutions. Outside the context of the pandemic, 2020 was already set to be a big year for blockchain’s real world use cases, developed in an ambiguous regulatory environment and matured in a more regulated world. With the emergence of Libra (now Diem), the rapid maturity towards real CBDCs, growing regulated products on cryptocurrency, the increasing regulatory clarity had poised 2020 for scalable progress.

2020 has been a decisive turning point for blockchain and crypto assets, especially, one of the most significant being the European Commission’s proposal for a digital asset equivalent of MiFID — MiCA. We are seeing the shift in attention and seriousness by national governments and their respective competent authorities.

The debate between traditional and DeFi continued to develop. However, the fundamental questions still remain the same: What legal rights does this asset confer upon the holder? How are investors able to accurately understand their risks in holding these assets? How do we ensure fair and equal dissemination of information to investors to understand their risks? Can this actually scale without introducing new risks?

The biggest concerns or perceived risks of yesteryear have been reframed in the context of the pandemic. Technology is not viewed with skepticism, but rather as the solution to real problems. We are finally at the tipping point, where we can clearly see through the technological fog created out of initial blockchain hype. We also understand where blockchain provides novel solutions and where it does not.

If 2020 has left us with anything, it is that digital assets are here in that we can see a model of where and how incumbents and new entrants are best poised to create a new future — a future that benefits not only from of the open access that the technology brings, but also from incumbent experience in the creation of fair, orderly, and scalable markets, and from the new entrant push to innovate and offer services to customers through the expansion of the platform business model.

Read more from industry leaders, regulators, and policy makers in our Annual Report here

GDF is an industry body promoting the development of best practices and conduct standards for the cryptoasset industry and advocacy with policy makers.