Cryptocurrency regulations should evolve: Mistletoe Singapore MD Atsushi Taira

The cryptocurrency regulations need to evolve since the existing laws are based on a centralised system, said Atsushi Taira, Managing Director of startup investor Mistletoe Singapore.

Smaller but advanced countries like Singapore and Estonia can take the lead and introduce innovative regulations.

“Blockchain is part of society. Regulators need to consider the decentralised nature of blockchain [while drafting laws]. Although they cannot control everything, they can at least put a minimum requirement like KYC (know your customer) for crypto transfer between two parties. It is necessary to prevent instances of anti-money laundering,” Taira said in an interview with e27.

There are different kinds of KYC models. For example, blockchain-based distributed KYC or zero-knowledge proof or ZKP (ZKP is a cryptographic method to prove that something is known to a third party without having to reveal the underlying information).

“Regulators need to be savvy enough to understand the technology and then accept new types of KYC,” said Taira, previously Senior VP (Global Business Strategy) at SoftBank Group. “If regulators push the existing KYC system (based on the concept of a centralised banking system), people won’t accept that. So regulators must be more advanced and adapt to the blockchain-based regulation.”

Taira also stressed that if Singapore and Estonia (economies where the financial system is advanced) can change the regulatory framework to accept the new forms of KYC, it can be a good starting point. Changing regulations may not be possible in big countries like Japan and the US because it’s hard to reach a consensus among various stakeholders.

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According to Taira, the ongoing financial crisis is a course correction and is good for the global startup ecosystem. When a recession occurs, all the bad guys and mediocre startups will go, and only strong ones will remain. In addition, the valuation will become reasonable. In that sense, it is an opportunity for the startup ecosystem.

“In 2009, when the economic recession happened, it proved to be a great vintage for VCs because they could find great startups and invest with a reasonable valuation. The return on investment was also good. So a legitimate startup and technology don’t need to worry about the current slowdown. Plus, it is a temporary phenomenon.

In his view, there is a good demand for central bank digital currencies (CBDCs) around the world, especially in the wake of the recent Luna and UST crashes. “We will require stablecoins in the future irrespective of the Luna and UST crashes. This will prompt central governments to introduce digital currency. When a country, for example, China introduces a CBDC, the US may be freaking out: ‘Oh my god, if China’s CBDCs spread worldwide, it will impact USD’. Because of that kind of attention, I think governments will consider introducing digital coins. I don’t know if it is good or bad for blockchain, but they will do it anyway.”

Mistletoe Singapore is a unit of Mistletoe Japan Inc., which was started in 2013 by Taizo Son, the youngest brother of SoftBank Founder Masayoshi Son. It primarily invests in hardware solutions across the globe and has invested in over 60 companies, including Ninjacart, Golden Equator, and Hatcher+.

The firm recently started investing in the Web3 domain. The primary focus is next-generation Web3 companies that are striving to make a social impact. For example, tokenisation of energy/electricity, carbon credit, and solutions targeting the unbanked population (it has already invested in an investment DAO in Vietnam).

“In that sense, we focus on linking with the real world. We hope that Web3 will change society,” Taira concluded.

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