The UNSW Business School Financial Services and Technology conference has heard that regulatory overreach may cause unintended consequences for Cryptocurrencies such as Bitcoin.
"Failing to keep up with technology risks regulatory over-reach and unintended consequences," says Mark Humphery-Jenner, an Associate Professor of Finance at UNSW Business School. "Quite often when regulators fail to engage with emerging technologies, they must react rapidly, and potentially in a blunt manner that has unintended consequences. This is arguably the cases with cryptocurrencies, such as Bitcoin"
He was speaking at the Financial Services and Technology: Financial Inclusion and Stability conference, hosted by the Institute of Global Finance at UNSW Business School, and the Asian Development Bank.
He says that one example, is the emergence of remittance providers. "In basic terms, these firms allow people to remit money from one country to another such as from Australia to an emerging market." Many users of remittance providers use them to support their families. However, people can also use these to fund illegal activities. "As a result, regulators have forced banks to take greater steps to scrutinise such customers. Banks have responded by shutting the remittance providers' accounts; in some cases, even if they were already working with regulators and complying with applicable regimes. This is perhaps not needed, and in fact could be considered an overreaction."
These issues were discussed at the conference by Anatoly Kirievsky, Head of Compliance, Optiver, Asia Pacific, and Nathan Lynch, Head of Bureau Chief Asian Pacific, Thomson-Reuters.
Mark Humphery-Jenner argues that regulatory overreach is damaging. "First, people still need these emerging services. Shutting down remittance companies simply shifts people into the unregulated sector, which makes regulators' jobs harder. Second, regulatory overreach undermines confidence in the regulators, and faith in the rule of law. The feeling that regulators have behaved arbitrarily can alienate people from the regulatory environment and make the regulators appear less business friendly."
The conference then looked at how regulators, and corporations, keep up with changes in technology and help to reduce the problems of regulatory complexity and regulatory overreach.
The conference was organised by Professor Fariborz Moshirian, Director of the Institute of Global Finance at UNSW. "It was great to have so many prestigious speakers in attendance, and to have them enlighten and inform us, and share their insights on cryptocurrencies which will be ever more important in a technologically linked world."
Other speakers at the conference included Ian Pollari, Global Co-Head of Financial Technology (Fintech), KPMG, Rhonda Piggott, Director, New South Wales State Office, Department of Foreign Affairs and Trade and Richard Yetsenga, Chief Economist, ANZ.
For further details contact Mark Humphery-Jenner on 02 9385 5853 or m.humpheryjenner@unsw.edu.au
Media contact: Julian Lorkin: 02 9385 9887