Providing context around the regulatory landscape today, Ramaswamy explained that crypto tends to come into contact with three main areas of regulation: illicit finance regulation, capital formation and market integrity, and financial stability factors. However, he warned that it is the development of an additional protocol layer “obviously has very profound implications for financial services which is built on the current backbone of the internet, and is going to have much broader implications globally.” These impacts will stretch across technology, technological diplomacy, foreign relations, as well as the shape of the US economy. “That’s the bit that I think there’s been a sense of ‘the dog that didn’t bark.’ I don’t think policymakers and regulators are fully engaged with it, that’s the sleeping issue.” Tension has arisen in the space between innovation and compliance, because of the nature of the “multi-tiered technology stack” which is increasingly merging with the financial stack. He explained that the original insight of the Bitcoin paper, states that a settlement layer on a distributed system is not just an information communication layer, but a novel computer science concept. Yet, it bears much broader implications than just finance as it allows for the creation of programmable distributed layers on the internet. “The problem you have is that when people think about regulation they think about it very static way, when in fact it’s a dynamic concept. If we think about how the world is regulated today. The protocol layers of the internet are in fact regulated, but they’re generally regulated by self-regulatory organisations (SROs).” These “quasi-governmental, quasi private sector” firms are distinct from the self-regulatory organisations such as NACHA or FINRA which set industry standards for financial services. Beyond these SROs are regulators including the SEC, CFTC, FinCen among others. These two categories of regulators typically regulate the application layer. “Part of the issue we have today is that the financial regulators are starting to regulate or think that they’re regulating these base layers or protocol layers, which is a mistake. It’s a mistake because where regulators and certainly financial regulators are the least competent to make design decisions.” He added that the industry needs to carefully consider how that base layer can be regulated through self-regulation from standard setting bodies through best practices. It is something that needs to be developed more robustly. Finextra is on the ground at Money20/20, reporting on the event’s biggest updates and announcements. You can keep up to date with our coverage on Finextra’s Live@ page here.