A tokenized economy has a lot of added benefits, the primary one being that humans will have access to any asset in any place of the world.
Now, in terms of regulation, this is a nightmare. In a Blockchain economy, pretty much anyone can launch a service or start selling assets on a GLOBAL scale.
Today, many European banks don’t work with United States citizens because of compliances and regulations. Any deviation from U.S.A rules is punished pretty hard. So, the headaches that European banks will experience in dealing with American clients outweigh the benefits. Thus, they don’t do it.
Now, there are some globally accepted procedures for dealing with anti-money laundering, and tax evasion, which is more or less easy to understand. As well as to comply with.
But with digital assets and a tokenized economy, whole new sets of rules must be developed. And even more importantly, they need to be accepted by everyone.
Let’s start going over some of the issues that will be the most problematic to handle in an increasingly digitized economy.
Our identities in a digital world.
Anti-money laundering laws (AML) and know-your-customer (KYC) procedures will become commonplace in a tokenized economy. They will become foundational procedures, similar to how the Howey test is used by the U.S Securities and Exchange Commission for determining the status of ICO tokens.
Countries like Switzerland and Estonia are already utilizing digital identities in their public service sectors. Other developed nations and developing nations will follow after them. Therefore, KYC and MYL procedures will become more commonplace, and they will become fully automated.
Estonians and Swiss citizens can use their passports to sign off on digital transactions. All other documents will also become digital, like birth certificates, wedding registries, death certificates, etc. Everything will be stored on Blockchains in the near future.
This will simplify regulatory procedures since all data will be immutable, transparent, and publicly accessible by anyone with an internet connection.
Government regulators are already moving.
Bills are already being passed in the United States that allow government bodies to utilize saved funds for Blockchain research. Norway, Sweden, and the Ukraine are already developing standards for BankID schemes. Banks, financial platforms, distribution networks, and even basic brick and mortar stores are already figuring out ways of how to bypass intermediaries. Which do nothing but suck money for taking up space. Their services will become obsolete, and they will have to adjust accordingly.
The CME and EU mutual fund, Tobam, are opening up to digital asset adoption. Smart regulations, AML, and KYC processes will become more sophisticated with time. Currently, they are not developed well enough to support global mass adoption of a tokenized economy.
New standards that are needed for a tokenized economy.
First off, some standard approaches for tokenizing assets are needed to be put in place, as well as some sort of infrastructure.
Blockchains simply store information about some sort of asset. Simply throwing a token on a Blockchain is but 1/10th of the whole process required.
In order for our society to have an entirely tokenized economy and system we need the – standardized practices for administrators, asset lifecycle and depreciation, security protocols, global & accepted AML and KYC implementation, full payment support, commission and fee management, exchange and trade platform integration and support.
Though, all of this must be done while maintaining decentralization. Every company and organization can have their own public or private Blockchains, which can’t be manipulated, the best thing to do would be to implement some universal technical standards for maintaining these Blockchains.
Sophisticated change will come.
The world is becoming increasingly digitized. So, expect a lot of smart regulations to start popping up which will help link traditional economies to tokenized ones and Blockchain systems.