How a New Alliance Is Setting the Foundation for Progressive Blockchain Usage

2023 closed out with another major case between the crypto industry and regulators. A year after the infamous collapse of FTX, one of its main competitors, Binance, negotiated a settlement deal with US regulators expected to reach between $4 and $5 billion.

This lawsuit is one in a string of cases that highlight how the crypto industry is increasingly coming under the spotlight for fraudulent financial practices. While shady trading activity needs to be tackled across industries, the way regulators make these rules could be putting the cart before the horse when it comes to crypto.

One policy expert who is increasingly known as a divisive figure on this subject is Hester Peirce, a lawyer who serves as a Commissioner for the US Securities and Exchange Commission. In an interview with Bloomberg TV in November 2023, she commented: “I will say that litigation is not the most effective way to carry out regulations…we should really be thinking proactively about building a regulatory framework.”

While regulators and legacy institutions have been reluctant to embrace crypto and blockchain-related technologies, ignoring their growing presence in our digital landscape isn’t likely to hold out as a strategy for much longer. For one, there’s an increasing consensus that decentralized crypto markets will create significant security risks which makes the case to lay new regulatory foundations more pressing.

On the other, traditional financial structures don’t have a glowing track record with bailouts and collapsed banks as part of the regular run. For this reason, Peirce is keen to see a more competitive set-up that supports innovation “It’s something that we have to think about when we’re writing rules: Are rules preventing new products and services from coming into the industry?”

And it looks like this type of question could be answered sooner rather than later thanks to a new global blockchain forum in which Peirce is participating as a speaker.

The USA-UAE Alliance™ is set to launch on 6th March 2024 and is headed up by Edward Cullen of Crescite Innovation Corporation and Michael Amatulli of MVNM.

Finding the answer to pressing blockchain questions

While the run of aforementioned crypto-scandals hasn’t helped with blockchain’s reputation, Cullen and Amatulli are keen to point out that this is just one of the many potential ways that this developing technology can be applied.

After the USA-UAE Alliance™ launches at the Emirates Financial Tower this March, the team is aiming to nurture dialogue related to the whole suite of Web3 technologies. This is expected to include everything from the technological infrastructure needed to support transfers and transactions on the blockchain through to more altruistic examples such as tokens that help underbanked citizens accumulate value through rent payments.

As with crypto, much of the regulatory problems stem from the fact that frameworks are playing catch-up with the technology in real-time. With the new alliance, it’s hoped that experts can take a much more proactive approach and have open discussions about both the good and bad realities in a safe environment.

Cullen used an interesting example to illustrate this by drawing comparisons to the explosive rise of OpenAI in 2023 and the regulatory backlash that followed. “AI’s prowess took many by surprise and experts are keen to get ahead of emerging technologies in a more collective manner,” Cullen noted.

This dialogue between industry exports will be needed to support the creation of secure, decentralized digital systems that work for the many, not the few.

The line between progress and ethics

Much of the draw of decentralized systems stems from the anonymous nature Web3 promises its users in contrast to the data-surveillance era that played in during the growth of Web 2.0. But this anonymity is also a major concern for experts and lawmakers alike as it has the potential to open the door to more nefarious activity.

Rather than drawing their own line in the sand on this type of subject, the USA-UAE Alliance™ hopes to shine a spotlight on thorny questions and champion educational programs that offer people a crash course on subjects like digital asset adoption.

In this way, collective answers on blockchain applications can be reached by the many in reflection of the egalitarian aims of the technology itself.

Cullen and Amatulli were classmates at Georgetown University and both have strong ties with both the USA and UAE. They wanted to leverage the best of both their backgrounds to help support innovation with this technology and lean on the regulatory and financial prowess found in both host countries.

Amatulli noted that the alliance aims to act as a form of knowledge sharing more than anything. He commented that “there’s always a push and pull when it comes to new technologies and we need a symbiotic relationship between public-private sectors here.”

And while they predict changes are likely to be very subtle in the future for users, such as wallets being backed by a crypto company, things like tackling decentralized security is a top priority for experts behind the scenes.

For example, current Web 2.0 apps usually work using a two-factor authentication system that sends users back to service providers and system providers. As we navigate to the next stages of blockchain adoption, finding a way to offer security without sacrificing anonymity will be key.

The future of innovation in web3

Progress rarely happens without any backlash. While there is still some scope for change within the current environment, Cullen and Amatulli believe the real gains for disruptive technology now firmly lie with Web3, where a hotbed of innovative growth is waiting.

While the FAANGS have dominated the tech scene for the past decade, the events that play out as Web3 is adopted will likely usher in a new host of innovators and names.