Dutch Central Bank Chief Takes Aim at Jurisdictions That Attract insufficient Crypto Actors at Davos Panel

The Dutch Central Bank Governor and Chair of the Financial Stability Board, Klaas Knot, European Commissioner Mairead McGuinness, Ripple CEO Brad Garlinghouse, and UAE Digital Economy Minister Omar Bin Sultan Al Olama attended the World Economic Forum’s annual meeting in 2023.

DAVOS, Switzerland —On Thursday, two European regulators, an Arab lawmaker, and a lone crypto CEO met with a journalist in a snowy ski town – and the room quickly became sweltering.

Although the speakers agreed on the need to monitor the space on a global scale, they didn’t hold back when it came to addressing the recent market turmoil and company failures, which have sent both the industry and regulators scrambling to rebrand and regroup. 

The panel began with Omar bin Sultan Al Olama, the UAE’s Minister of State for artificial intelligence and the digital economy, declaring that his country’s innovation-friendly regulatory approach was far from “light touch,” and that no crypto companies, including Ripple, whose CEO Brad Garlinghouse sat next to him, currently held licenses from watchdog the Virtual Asset Regulation Authority (VARA). 

Stacy-Marie Ishmael, Bloomberg’s Managing Editor for Crypto, pressed the minister on why Dubai is the preferred destination for disgraced crypto founders seeking refuge or resurrection. 

Bad actors seek jurisdictions like Singapore, London, or Dubai because “people give” these places a “certain amount of credibility,” according to Minister Al Olama. Minister Al Olama denied reports that Do Kwon, the founder of the defunct cryptocurrency Terra, had visited Dubai as South Korean authorities launched a global search for him.

I went looking for him after reading that he was in Dubai. The man was not there. The minister made a remark.  As president of the Dutch central bank and head of the Financial Stability Board, Knot criticized jurisdictions that attract crypto-types for lacking oversight – a topic that has become increasingly relevant since Sam Bankman-Fried’s Bahamas-based FTX collapsed following poor management and misappropriation of company funds.

Many of these crypto assets are offered by places Knot calls sunny places for shady people. Later, Minister Al Olama disputed the regulator’s assertion, claiming that bad actors do not have a legal basis “Nationality” or “destination” are two examples. “They’ll be all over the place. You’ll see them in the Bahamas, New York and London and what we need to do as governments collaborate with the industry to ensure that if someone does something wrong, he can’t move from one place to the other “He stated. 

Despite his skepticism about crypto assets, Knot played to the blockchain-not-crypto theme of the week at Davos, praising the blockchain technology behind crypto transactions.

One of the things is that the advantages of this technology are undeniable. Nobody is questioning the use of technology after all Knot stated.

Knot’s statement contradicted the Dutch central bank’s previous position that blockchain is inefficient. On Thursday’s panel, however, Knot stated that regulators have been “so busy” with the “risk mitigation” aspect of crypto that they have paid less attention to harnessing the technology’s benefits. 

As the lone cryptocurrency representative on the panel, Garlinghouse fought for the integrity of the disgraced industry following last year’s market collapse. Over time, Garlinghouse believes we’ll spend less time discussing Mt. Gox and Silk Road, and more time talking about enterprise-scaled use cases where it’s not an experiment.

As thousands of global retail investors were the hardest hit by the crypto collapses of 2022, Garlinghouse and Mairead McGuinness, the European Commissioner for Financial Services, Financial Stability, and Capital Markets Union, emphasized the importance of regulatory attention to consumer protection measures.

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