Why evidence trumps assertion in convincing regulators to let the future of finance happen 

Of all the international organisations taking a close interest in new financial technologies and techniques, the Paris-based Organisation for Economic Co-operation and Development (OECD) is pursuing the most thoughtful and wide-ranging approach as it fulfils its mandate to help its 38 membrer-states devise policies that maximise the benefits and minimise the risks of technological innovation, from digital data flows to DeFi. Future of Finance co-founder Dominic Hobson spoke to Greg Medcraft, who heads its  Directorate for Financial and Enterprise Affairs, about blockchain, regulation of tokenisation and digital identity.  

Questions that are being asked

1. The OECD has a role in establishing international standards and best practices and has had considerable success in areas such as governance, offshore financial centres and tax compliance. Blockchain networks are now developing in multiple areas, but in commercial and national silos, creating a risk of a loss of inter-operability between blockchain networks and between blockchain networks and traditional networks. What has the OECD done, what is it doing and what can it do to mitigate the risk of fragmentation? 
   • [1a. What can the OECD do to accelerate agreement on purely technical standards to enable blockchain networks to inter-operate?]
2. The OECD also gathers statistics, analyses data and publishes reports. One issue that is inhibiting issuers and investors from engaging in the digital asset tokenisation markets is legal and regulatory uncertainty. Clearly, tracking legal and regulatory developments in tokenisation markets in 36 member-states would be a massive undertaking, but are you doing any work which would help to encourage a sufficient degree of legal and regulatory consistency to accelerate the growth of token markets across national borders? 
   • [2a What work are you doing to address the financial stability and investor protection  issues raised by tokenisation (the current DeFi  token market, for example, has all the makings of an ICO-style boom and bust)?]
3. The Financial Action Task Force (FATF) published a report in March that described Digital Identity as being at a “inflection point” and encouraged financial institutions to take Digital Identity seriously as a solution to its own Recommendation 10 on identifying beneficial owners to combat money laundering and terrorist financing. The cost savings, from ending the duplication of KYC, AML, CFT and sanction screening checks, are potentially enormous,  and digital IDs could also give a boost to trade finance, cross-border capital flows and the inclusion of people and businesses in countries with poor reputations for financial crime compliance. Again, progress could be accelerated by standards and best practices that break down data silos, facilitate inter-operability and encourage companies and corporates to accept digital identities across as well as within national borders. Is this work to which the OECD could contribute? 
   • [3a We are particularly surprised at the limited enthusiasm of major financial institutions for Digital Identity, and their continuing preference for data-sharing alternatives. What can the OECD do to help change attitudes?]