Abstract

The crypto industry suffered a prolonged crisis in 2022. It is now at a turning point, as lawmakers around the world deploy new statutes aimed at curtailing endemic fraud, inadequate risk management, and bad governance. This is a net positive for the ecosystem – without legal certainty, it cannot flourish. In this paper, I argue that some crypto-native constructs may usefully complement traditional frameworks in the regulation of both crypto itself and the broader financial system. Protected environments, such as regulatory sandboxes and innovation hubs, should be leveraged to foster creative cooperation between authorities and the crypto industry.

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