IE Impact Xcelerator and Cryptocurrency Company Ripple Discuss Virtual Assets and Regulations

The IE Impact Xcelerator and cryptocurrency company Ripple launched the new IE Ripple Asset Regulation Lab with the Ripple Future of Asset Regulation event, designed as a panel discussion to discover gaps between new ventures, regulators and larger firms for future research to address those challenges.

Held at IE University, the discussion was moderated by Ikhlaq Sidhu, dean of IE School of Science and Technology. The six panelists included regulators and experts from the Virtual Assets Regulatory Authority (VARA),  UC Berkeley, Anchain.AI, Ospree, Ripple, and IE University.

The event marked the first step in the new alliance between IE Impact Xcelerator (iX) and Ripple, setting up an iX-Virtual Asset Regulation Lab that will address important future challenges in the sector.

The panelists discussed several research opportunities in virtual asset adoption including the need for universally accepted regulations, the consideration of friction or kill switches in crypto transactions for market control, the use of AI solutions for digital ID’s, and possible strategies to increase market liquidity and stability with technology solutions.

Sidhu began the discussion and asked if regulating virtual assets could compromise their effectiveness, referencing people’s contrasting perspectives – either a complete lack of regulation or following the controlled approach of traditional banking.

“If the original blockchain idea was that you’re going to have freedom from all of those extra oversights and rules, and there’s going to be this huge efficiency gain,” he said. “But then as we get into it, we're like, oh, but you have to apply all the old regulations or a big chunk of them in order to really make it work for the world. Then did you basically completely undermine the value that was originally started?”

Andrew Whitworth, Policy Head for EMEA at Ripple emphasized that educating policymakers,  industry professionals and all stakeholders is key to finding common grounds for the dilemma.

“This is about education of policymakers, but also, again of industry and tech people to understand what environment they're stepping into,” he responded. “So, this kind of two-way transfer of information - education about what each side is trying to do and why, and then meeting a common ground is, I think, the solution to a lot of concern.”

Deepa Raja Carbon, Managing Director and Vice Chair at VARA Dubai explained how regulations do not necessarily have to depart virtual assets from their core principles and disputed the binary view towards it.

“Regulation doesn’t come as a necessary evil in this setup,” she said. “You’ve either got to make the choice between either a regulator who tends to be protective in their approach or there is an innovator who wants to be enabling. That is not the case.”

Carbon explained that more firms and people are demanding regulation from the perspective of preservation.

Sidhu then shifted the discussion and asked what other spaces researchers need to focus on to fill gaps in the future of virtual assets and their regulations.

Jillian Grennan, Associate Professor of Finance and Sustainability at UC Berkeley spoke about her interest in the potential benefits of virtual assets for vulnerable populations.

“One thing you’ve asked about is regulation, but there’s also going to be a spillover effect to other markets. In the places where I get excited is understanding that adopting a cryptocurrency in some communities because there’s violence and unstable governments,” she said.  “It allows a chance for the diaspora to get money. It also means that because you don’t have physical cash, there is no longer a threat of violence that gets you because they can’t actually steal your digital wallet.”

Javier Tamashiro, CEO and Co-Founder of Ospree addressed the need of creating a connection between traditional and crypto finance, rather than believing one will take over the other.

“There is a huge discussion about that. At the beginning it was that the crypto space is going to take over the banking industry, and then the opposite view,” he explained. “I think that's not the right thing. The problem, I think, we need both and our focus should be on how they can complement each other.”

Luis Maldonado, Economist and Fintech expert stressed that deeper research is needed to bridge the knowledge gap between the real and crypto economies to resolve regulators’ concerns of financial stability.

“Financial stability is one of the main areas a regulator is thinking about when regulating. The fact that there is a lack of knowledge of the connection between the real economy and the crypto economy is a very clear gap that actually could be covered by research,” he said.

The IE Ripple Asset Regulation Lab has opened a call for research proposals.

IE Impact Xcelerator Events are affiliated with and support the missions of the IE School of Science and Technology, Rise Europe, UC Berkeley SCET, and other Tech Catalyst global partners.