Cross-Border Collaboration on Digital Assets Will Increase Substantially

The rise of cryptocurrencies is now an undeniable fact for several reasons. The most important reason is the internal politics of the US which is fueling the rise of cryptocurrencies. The primary reason behind the increase of Defi is that the fiat currencies of many countries are steadily losing their purchasing power. Some countries continue to face chronic inflation and have already substituted cryptocurrencies with their fiats. However, the rise of cryptocurrencies is also marred by illegal use of it in cyber crimes, terrorism, and fraud. This is also another reason why cross-border collaboration on digital assets will increase. It will help in curbing many crimes, instill confidence, and lead to further growth of cryptocurrencies.

Need For Cross-Border Collaboration on Digital Assets

The cryptocurrency exchange platforms that deal with digital assets rely on blockchain technology to carry out transactions. These transactions can be carried out with a stable net connection from anywhere in the world. However, since the transactions are transnational, any discrepancy or issue often leads to jurisdictional problems between countries.  Criminals and unscrupulous elements take advantage of this and commit more crimes without worries. This is why collaboration among different countries is the need of the hour.

International Requirements

The number of digital assets and their providers has grown considerably. This has made the DeFi more complicated than before. Thus, individual jurisdictions have limited power to deal with a massive rise of DeFi. This prompts the need for international requirements. There are laws such as the Virtual Assets Service Providers (VASP) Act that help regulators take a cordial approach to overseeing digital assets. 

Keep Pace With New Developments

In the world of digital assets, changes are constant owing to innovations. Therefore, to keep pace with the new developments, cross-border collaboration is of utmost importance. The crypto industry will inevitably witness more demands because now the US government seems to support it. This will create more opportunities for people to earn money, grow their businesses, and generate more employment. Innovations in financial services are essential for balancing against risks. 

There is a decent possibility that regulators will become more cautious and lenient simultaneously, and financial centers will support business opportunities and have more risk-based approaches. 

Major Recommendations

Cross-border cooperation can become fruitful if only certain recommendations are fulfilled. It will help in reducing the chances of financial fraud and promote customer safety.

Cooperation in Investigations

Collaboration is necessary for combating criminals operating across countries to scam people. The joint investigations will lead to better coordination and save time. Moreover, it will help in establishing mutually beneficial frameworks.

Standardization

The standardization of regulatory frameworks is necessary to promote consistent oversight. There is a need to set up jurisdictions everywhere that support and align with rules to promote parity.

Safe Information Sharing

A seamless information exchange will monitor international activities effectively. Compliance, transactions, and data sharing of users are a must to combat crimes like embezzlement, terror financing, and data manipulation.

Emergency Protocols

The Financial Stability Board (FSB) emphasizes the importance of having separate financial emergency protocols. It requires implementing cautionary measures to supervise both stablecoin failures, and exchange collapses.

Conclusion

The growing demand for cryptocurrencies requires cross-border collaboration. The recommendations suggested above can provide a blueprint to achieve the goal. DeFi has tremendous potential and currently, mainstream politicians, media, and even central banks are realizing that. Therefore, to promote better financial integrity, and transparency standards, international regulations and collaboration hold the key. However, these regulations need thorough brainstorming, consultations, and clear policies among financial experts. The jurisdictional issues concerning DeFi are resolvable only if the geo-political issues do not emerge as a hindrance.