As we continue to move to a more digitized economy and society, we must find ways to manage digital assets as part of trust and estate services. We’ve discussed the SEC’s Proposed Safeguarding Rule, the risks and criticisms of the proposal, the general regulatory divide, and the need for asset-specific solutions. Regulators do not have the answers. In the absence of a clear solution with industry support, regulators cannot be expected to provide clear guidance.
We should pursue stable, long-term industry solutions and advocate for clear regulations and regulatory alignment. This requires that banks, custodians, and other fiduciaries work together to develop a collective view on a sustainable approach to digital assets.
This is not just a crypto problem. Unreliable trust and estate services threaten the stability and integrity of key parts of the financial system. Banks, custodians, and other fiduciaries risk uncertain liability, ad hoc reactive regulations, government pressure to protect client assets, and opposition to pioneers acting on their own.
The trust and estate industry must start by creating a working group. This could be independent or within an existing industry group, such as the American Bankers Association. The working group can liaise with lawmakers and regulators to develop sustainable frameworks for the industry as a whole to accomplish three goals:
- Create Regulatory Alignment: Digital assets are governed by a fragmented regulatory landscape. Divergent approaches and inconsistent regulations across jurisdictions complicate trust and estate services. A working group dedicated to proposing regulatory alignment can help mitigate these challenges. By collaborating with regulatory bodies and industry experts, we can create a unified framework that fosters clarity, transparency, and trust. Such alignment would offer greater legal certainty, reducing compliance costs and facilitating the development of new digital asset products and services.
- Enhance Customer Protection: Ensuring customer protection is paramount. Regulatory alignment and standardized procedures foster robust consumer safeguards. A collaborative approach to regulation would inspire confidence among consumers, encouraging wider adoption and promoting financial inclusion.
- Seize Competitive Advantages: The working group will help keep executives ahead of emerging trends and seize opportunities for innovation. Collaborating with regulators and industry peers will facilitate a deeper understanding of digital assets and their potential applications.
By establishing a working group to pursue regulatory alignment, executives can drive innovation while ensuring stability and customer protection. Collaborating with regulatory bodies and industry experts will create a cohesive framework that unlocks digital assets for trust and estate services. This proactive approach allows participants in the working group to pioneer the evolving financial ecosystem, offering competitive advantages, and fostering long-term success.
* Any institution interested in collaborating on a working group can reach out to info@second-key.com for current opportunities.