The need for a user-centric digital experience gave rise to the development of Web3, but the question remains — what impact will regulatory oversight have on the continued growth of Web3?
Web3 presents the next generation of the internet, a trustless, decentralized, and privacy-protective space that embraces blockchain technology. Through decentralized applications (dApps) and a cryptocurrency token-based economic model, Web3 sets out to completely overhaul the modern internet user experience.
When considering the impact of regulations on Web3 — and the effect regulatory oversight has on new tech adoption — it is vital to holistically comprehend the implications it can have on Web3 growth.
Some platforms are already taking a proactive stance to future-proof Web3, like Multibank.io — aiming to ensure regulation safeguards users and mitigates security risks. This foresight aims to ensure Web3 growth proceeds unhindered by regulatory bottlenecks and instead, works parallel to regulation to fuel future growth in the Web3 ecosystem.
Historical Web3 Regulation Overview
Initially, Web3 grew essentially out-of-sight of regulatory oversight, only reaching the peripheries of regulatory bodies after its popularity expanded more globally. The first regulatory responses were reactive to remedy illegal activity concerns and to alleviate cryptocurrency-focused financial threats. Such measures steadily set the foundations for future regulations that held more structured approaches.
Web3 Regulation Milestones
In observing a number of global regulatory milestones through the years it becomes clear that regulation has the ability to actually foster further Web3 growth — rather than simply hinder it.
In the United States (U.S.) the Bank Secrecy Act was adapted to mandate know-your-customer (KYC) protocols for cryptocurrency exchanges. This ensured security for exchanges by verifying customer identity before permitting trade of cryptocurrencies.
In Europe, the 5th Anti-Money Laundering Directive (5AMLD) helped improve transparency by expanding its regulatory oversight to include crypto exchanges and crypto wallet providers.
In Asia, Japan made Bitcoin (BTC) payments legal in 2017 after introducing licensing regimes for crypto exchanges. Though creating extra hurdles for exchanges, this act brought BTC one step further to global adoption.
In the MENA (Middle East and North Africa), the United Arab Emirates (UAE) created a regulatory framework for crypto within its Free Trade Zone. This resulted in attracting global crypto enterprise opportunities to the UAE — inspiring further Web3 innovation.
Assessing these four examples of globally enacted regulatory actions, it reveals that regulations are steadily legitimizing the fundamental technology that Web3 is built upon — further boosting long-term adoption and growth.
Modern Web3 Regulation
When observing modern global regulations that impact Web3 across the aforementioned economic regions, we can see again how regulation can positively affect Web3 growth.
In the U.S. a number of regulations have been put in place — primarily geared towards consumer protections. Through Acts such as the Responsible Financial Innovation Act (RFIA) introduced in 2022, the U.S. aims to provide regulatory clarity for agencies overseeing digital asset markets. The RFIA integrated digital assets into existing tax and banking law while spurring innovation within the digital asset sector.
In the European Union (EU), the Markets in Crypto-Assets Regulation (MiCA) was created to cover crypto-assets that were not regulated by existing financial services legislation. This aimed to standardize crypto activities, ensure consumer protection, and establish market integrity and stability.
In Asia, the regulatory scene paints a conflict in the perception of cryptocurrencies and Web3. More restrictive crypto regulations can be seen arising in China while, in contrast, Singapore and Hong Kong develop crypto regulation that encourages innovation in the Web3 space.
In the MENA, the same conflicted perceptions appear — as the likes of Saudi Arabia and Iraq outright ban cryptocurrencies while the UAE and Abu Dhabi welcome the technology. Moreover, UAE and Abu Dhabi are both working independently towards becoming two hubs for cryptocurrencies and the future of Web3 through crypto-positive regulatory action.
MultiBank.io: Promoting Proactive Regulatory Oversight
MultiBank.io stands at the forefront as a platform that highlights potential success of crypto platforms that operate successfully within regulatory frameworks. The platform actively seeks regulatory compliance not only to ensure legitimacy in all its crypto operations but to also ensure user security.
Through proactive regulatory compliance, it benefits the crypto industry as a whole by helping to set structure regulation that minimizes bad actors and ensures fair access for all participants. This compliance increases user trust, reduces the risks of fraud, and helps grow both Web3 and a more diverse investor base.
When considering the necessary precautions institutions need to take when entering any financial venture or sector, regulatory compliance is vital. By taking a proactive approach like MultiBank.io, institutional investors can expect a smoother transition into crypto markets and more importantly, the Web3 space.
MultiBank.io’s approach to regulatory oversight helps engage with regulators and foster future Web3 growth by creating realistic guidance and effective regulations that govern crypto-asset security.
Web3: Future Growth Through Proactive Regulation
As assessed through this article, the adoption of steadily incorporated regulations that create safe and fair guidelines helps boost the growth of Web3. This proactive approach to promoting regulatory oversight helps support the decentralized and global nature of Web3 tech.
Web3 is a continuously growing technology that will inevitably give rise to regulatory challenges. By working with regulatory bodies — rather than against them — the long-term growth, adoption, and stability of Web3 can become a reality. Through the proactive regulatory approach employed by platforms like MultiBank.io, the future of Web3 is secured.
