Adeline Bachellerie

As governments and institutions grapple with regulating Layer 1 blockchains, approaches vary widely - from integrating permissionless technologies within structured regulatory environments to favouring permissioned measures for greater oversight.

This panel will explore how Layer 1 protocols influence regulatory strategies, examining challenges such as decentralized governance, tax policy complexities, and AML/KYC compliance, as well as how emerging approaches, such as decentralised blockchain protocols, can support organisations in achieving their regulatory objectives. What approaches can regulators and industry leaders take to support blockchain innovation and interoperability while safeguarding economic stability and compliance?

Legislators and regulators are currently considering how to support and oversee financial market infrastructure that leverages DLT technology. This requires changes to the trading and post-trading infrastructure as well as targeted regulatory changes.

One of the key questions is what form of digital money will be used to settle transactions, i.e., what tokenized instruments will be allowed and fit for purpose? EU regulators seem to prefer wholesale CBDC over stablecoins. This coincides with the additional momentum for wholesale CBDC in the EU and synthetic CBDCs in the UK. However, CBDCs are not the only option – stablecoins and even tokenized money market funds (MMFs) may have a role to play. The emerging US approach will also shape market preferences and is likely to spill over into European policy discussion.

In this regard, this roundtable will bring together policymakers, technologists and financial sector experts to tackle the following main questions:

• What are the lessons learned from recent tokenization trials when it comes to the digital money used for settlement? What are the next steps in Europe and in the UK on developing the payment and settlement layer for tokenization?
• Can stablecoins play a role? What about other versions, like synthetic stablecoins, or tokenized MMFs?
• Are there fragmentation or liquidity risks if the UK or EU are out of step with other jurisdictions?
• How should regulators approach this?