The art of enacting legislation in a timely fashion requires strong cooperation between regulators and industry officials.
“Coming together is a beginning, staying together is progress, and working together is success” — the words of Henry Ford give expression to the spirit of collaboration that defines human progress. His ethos around unity extends to many societal strands, including endeavors of profit, community initiatives and far-reaching government policies. When navigating uncharted territory, such as the handling of technological innovation from a regulatory perspective, different stakeholder groups must resist the urge to remain siloed in their strategies and lean into Ford’s vision for shared success.
The art of enacting legislation requires strong cooperation and delicate management of stakeholder interests, with external forces invariably impacting implementation efforts. We must prioritize substance over speed, as opposed to rushed policy action that doesn’t thoroughly take into consideration the needs of industry, relevant sector groups or citizens. The variables that can be controlled by regulators, however, should be.
Absorbing industry insights from the very beginning of a protracted formulation process can pave shortcuts to success. By aligning objectives and working together with industry representatives, regulators have the best chance of crafting legislation in a smooth and decisive manner, setting the wheels in motion for sustainable growth. Of course, a lot of the above rhetoric is only as powerful as the anecdotal evidence that captures the benefits of such an approach.
In relative terms, successfully establishing a framework that sets out clear principles to encompass an evolving sector is a result of shared ambition. When it became clear that long-term distributed ledger technology innovation was on the horizon, the gears began to turn within Gibraltar’s business, academic and political circles to get a jump start on the rest of the world.
A task force was created to bring a vision of DLT regulation to life that provided the desired levels of security and assurance for regulators, while also being cognizant of the conditions needed to help DLT projects get off the ground. Industry representation in this task force ensured that collectively, we steered the regulation in the right direction, providing a steady road to market for quality blockchain projects.
While collaboration between industry and government is the bedrock to the successful implementation of new regulatory policies, this approach can be applied to legislative renewal efforts. Earlier this year, Gibraltar’s Legislative Reform Program provided another example of a coordinated approach between key stakeholders to make compliance easier within an existing body of legislation.
While legacy legislation must be respected, opportunities for legislative renovation should be seized, facilitating a confluence of regulatory and industry discussion. It might not have to lead to a complete overhaul of regulation, but it sets the table for legislative assessment, enabling a wider discussion on the benefits and roadblocks associated with a particular policy or framework from an industry perspective.
Recently, France’s Financial Markets Authority, or AMF, called for a regulatory sandbox to be created to study the impact of security tokens in the European Union — a move that would provide regulatory latitude to loosen constraints for certain security token projects. This illustrates how misalignment between existing legislation and new innovations can be problematic but also demonstrates how regulators can be enablers of innovation by easing legislative restrictions for transitional, temporary phases of exploration.
When it comes to DLT exploration and blockchain-powered financial instruments, a certain degree of regulatory wriggle room is required to support the development of new solutions without regulatory reprimands. A sandbox, as proposed by the AMF, would act as a microcosm of how new technological innovations and financial solutions can be nurtured by regulators in a safe environment, complete with industry and regulatory oversight.
To echo the sentiment of Henry Ford, the coming together of regulators and industry figures is a positive and necessary preliminary step, the maintenance of this open dialogue is progress, but the tangible outcomes stemming from collaboration and coordination is the true mark of success. In times of economic uncertainty, this vision takes on a more pronounced significance and reminds us that our collective efforts yield greater returns for broader society.
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