QUAD: Right Platform for Global Crypto Regulations?

During the recently concluded QUAD (Quadrilateral Security Dialogue) summit in Tokyo, QUAD members – India, Japan, Australia and USA have resolved to invest $50 billion in the next 5 years on various infrastructure projects particularly in Indo-Pacific to bring out developmental benefits for the region. During the summit, members mapped out and vowed to resolve various vulnerabilities ranging from semiconductor issues to cooperation on 5G technology and also on diversification of supply chain.

QUAD members, comprising the world’s oldest and largest democracies with a combined GDP of $34 trillion looking at their recent collaborative activities along with the objective of technological advancement put forth by QUAD members, can easily be the right platform to kick start dialogue on global regulations for crypto. Looking at the crypto adoption profile of each member, we can certainly expect greater cooperation among the members to churn-out uniform research-backed crypto laws. 

Member CountryCrypto Users% Of Population
India100,740,3207.30%
USA27,491,8108.31%
Japan2,079,6531.64%
Australia857,5533.36%

Source: https://triple-a.io/crypto-ownership/

The global digital asset industry amounts to $1.2 Trillion with more than 19,600 cryptocurrencies*. Central Banks and regulators across the world are closely tracking the growing crypto industry and are also weighing up different regulatory options in order to deal with industry in a comprehensive manner. India has recently introduced taxation framework for crypto users and also introduced advertisement guidelines for the industry. The Reserve Bank of India is in process to introduce state-backed CBDC. Japan and Australia have progressive regulatory framework in place, registration of crypto-exchanges, KYC policies and taxation. As Government of India has reiterated domestic regulations won’t succeed without a global census. 

Going by the recent happenings, the 4-member QUAD group could prove to be the best bet for initiating global coordinated approach together leveraging best practices and learnings from each other as well as risk assessments and establishing common standards. The QUAD group can take lead to introduce sustainable regulations for all stakeholders on the following:

1. Authorization and licensing of digital asset service providers, along with clarity on storage, transfer, settlement, and custody of reserves and assets. Well-established mechanism with the designated regulators. 

2. Guidelines on Tokenization would form the core of crypto industry as it has got the potential to reshape the financial markets. Use cases of tokenization have already been contemplated across multiple industries like real Estate, games & music, and trading & lending. Tokenization enables reduction in barriers to investment, thereby encouraging retail investors to trade assets that were traditionally expensive and featured lower liquidity. 

3. Regulations for financial institutions concerning their exposure to and engagement with digital asset service providers with appropriate banking services, securities and insurance. Which will help in paving the way for secured and trusted investment environment for the users.

4. Setting up a QUAD Blockchain Forum on the lines of World Economic Forum to jointly collaborate on formulating inter govt crypto policies. In view of the growth of digital currency markets and their increasing connection to mainstream, finance has made crypto a top focus area for regulators around the world. 

5. Create a Node-based blockchain between satellites of the QUAD countries for data sharing and other activities on a private blockchain. BRICS countries have recently formed a committee to initiate sharing of remote sensing data to be used in protection of environment, mitigation of national disasters and climate change. Same arrangement can be formed for QUAD alliance for satellite data sharing based on a private blockchain augmenting cooperation of alliance on National Security front.

6. Exponentially growth witnessed by the industry and coupled with promising start-ups coming up to address variety of challenges in various industries, would certainly need financial backing to ensure establishing a vibrant Web3.0 ecosystem. Each member of the QUAD alliance can play on their strengths like financing, skilled resources, technology and infrastructure, to provide required support to other members. It can be initiated by establishing a dedicated financing mechanism by ensuring investments among the countries for Web3.

Eventually, this will pave the way for optimization of global economic development and integration of new-age technology to further out developmental benefits to the masses. 

*Source: CoinMarketCap

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