As per a study by the Cambridge Centre for Alternative Finance (CCAF) that was released on April 16, the primary reason as to why a clear regulatory policy cannot be implemented is because of the lack of standard global terminology for crypto assets. The report notes that a variety of major terms in the crypto industry is often used interchangeably and may also not have a clear definition, and that hampers global regulatory response.
The research which was conducted with support from the Nomura Research Institute (NRI), provides a detailed analysis of the regulatory landscape on crypto asset activities in 23 jurisdictions. The data was collected mainly through desktop research from November 2018 to early February 2019. The study elaborates that the very term “crypto asset” lacks a specific definition and is widely used as an umbrella term to define digital tokens that are issued and transferred on distributed ledger technology (DLT), specifically blockchain, systems. The research argues that the very terms crypto asset and token, that are used interchangeably, based on the context can pertain to different meanings.
The report basically provides three important contexts for the definition of crypto assets. In a broader sense, the term includes all types of digital tokens issued and distributed on a blockchain. From an intermediate perspective, a crypto asset can refer to all kinds of digital tokens on a blockchain with open access, which does not necessarily need to perform a function. From a narrower viewpoint, crypto assets only refer to digital tokens on open DLT systems that play an essential role in functioning, the report reads.
Moreover, the researchers have outlined three significant challenges that are faced by global regulators of crypto. Before the adoption of clearly defined, standardised terminology, regulatory jurisdictions should first understand the nuances of the different terms and identify the language that is most suitable to their statutory objectives.
The CCAF research also says that 82% of analysed jurisdictions have distinguished crypto assets which have characteristics of a security from other types of cryptos. As a result of that, activities relating to crypto assets that are considered securities are automatically brought under the authority of local securities laws.