Monero Core Developer Thinks Crypto Space Will Be Significantly Impacted by Regulatory Arbitrage


Ricardo “Fluffypony” Spagni is a core developer for Monero who recently attended the “Innovate Finance” event, which was hosted last week in Davos, Switzerland.

At a panel, Spagni spoke on cryptocurrency, eventually leading to the way that regulatory arbitrage could have a serious effect on the overall crypto space in the next few years. Spagni started off with being fairly dismissive that crypto even being in the economy “is going to cause governments to topple.” Adding that it is “obviously ludicrous.”

Instead, he expressed his preference for something subtle in how talent and innovation could be distributed, which would ultimately be stirred up by a lack of consistency in the regulatory measures made around the world. With this concept, crypto will have to turn to regulatory arbitrage, just to break into the areas that are “open to decentralized projects, through regulation [and] tax breaks.”

He added, “This won’t necessarily lead to governments being toppled, but it’s going to lead to an interesting brain drain […] some of the smartest people on the planet are working [in crypto] and when they start clustering in places that are more friendly from a regulatory perspective, that’s going to create something very, very interesting.”

During the panel, Spagni expressed how there are many new things happening in countries like South Africa, Nigeria, Kenya, and Tanzania.

Spagni brought the attention to Malta, which is known by the industry as “blockchain island” for its transparency in the crypto regulatory climate. Locations that are crypto-friendly like Malta and others are beneficial for individuals and families that want to develop upon their projects without much inhibitions.

The predictions made by Spagni also brings up Tim Draper’s response to the anti-crypto stance that India’s central bank has taken. Spagni called their stance a major mistake, considering the prohibition in place that keeps domestic banks from being involved in any way with crypto businesses. Arbitrage has, so far, proven to be a concept that is being developed upon around the world.

The crypto industry leaders rising up in the world have been gravitating towards operation within Malta to expand, even including big names like Binance, OKex, and BitBay.

Along with Spagni’s comments, Meltem Demirors, the Chief Strategy Officer at CoinShares, argued,

“While the regulatory arbitrage is interesting, countries like Malta are not big financial markets. The issue is that we have already seen this with challenger banks; the minute the EU regulators do not like what is happening, they cut off access. So, while it is great to be in Malta or Bermuda or other friendly jurisdictions, people want to be where the assets and markets are. Until that shifts, I think it’s going to be difficult to see that moving.”

Nevin Freeman seemed to agree on with Spagni’s side, disagreeing with Demirors. The Reserve co-founder said that the growth will probably come from locations like New York, Silicon Valley, and others, but with the technical skillset needed to advance the crypto worked as a whole.

For success, Freeman says that there will need to be “the combination of having the real world understanding but also having the entrepreneurial drive.”

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