I get it. But the current regulatory path often seems more like an obstacle than an innovation pathway. Such a wall would, by default, cut off artists and entrepreneurs in Southeast Asia from accessing the opportunities that Web3 can provide, when many need them the most. We need to ask ourselves: at what cost does this pursuit of a "safe" crypto environment come?

One Size Fits All, Really?

The UK, with its developed financial infrastructure and deep investor base, is developing crypto regulation oriented around protecting their citizens. That's understandable. Have they thought about the hugely different economic realities of Southeast Asia? A regulation built for a London hedge fund might be utterly inaccessible to a Balinese artist trying to tokenize their work to escape predatory galleries, or a Filipino coder building decentralized apps to serve their local community.

Take the example of an aspiring musician living in Jakarta. Web3 technology enables creators to build direct relationships with their fans. It cuts out the middlemen and gives artists control over making a living from their art. If UK regulations become the de facto global standard, requiring expensive compliance measures and legal hoops, that musician is shut out. In doing so, they’ve returned to square one, dependent on a system that has always and continues to let them down. Is this the "innovation" we're championing? I think not!

It would be like trying to enforce the same building codes for skyscrapers on a bamboo hut village. The intent may be noble – protecting it above all else – but the implementation is a nightmare. That’s overkill, and quite frankly that approach misses the important differences in context and most importantly, need.

The Forgotten Voices of Southeast Asia

The call to more strictly regulate crypto is led by the voices from the developed world. We see the talking points for institutional investors, compliance costs for large exchanges, their concern about protecting retail investors from scams. Where is the artistic birthplace of hip hop’s Renaissance men and Southeast Asian artists and entrepreneurs? Similarly, these communities stand to benefit most from the opportunities presented by decentralized technologies.

These are two stories out of dozens I’ve heard from artists in Thailand. With NFTs, they have a new opportunity to diversify their funding streams and engage more directly with their audiences. These people aren’t in it for the get rich quick scheme. Rather, they look for a long-term career path that allows them to make a life doing what they love. Limiting their promise with a thicket of outmoded regulations is bad for business, unjust, and in so many ways ignorant.

Take the example of Anya, a Vietnamese digital artist. She uses NFTs to sell her art directly to collectors, bypassing traditional galleries that take a huge cut of her earnings. The UK’s rules, too, are meant to protect investors. They could unknowingly prevent her from accessing these new markets, forcing her back into an ecosystem that cheapens her talent. Where is the justice in that?

Let’s reframe crypto regulation to focus less on consumer protection. We must start to see it not just as an agnostic transportation problem, but as a foundational matter of economic justice and equitable access to opportunity.

  • Current Focus: Preventing scams, protecting investors.
  • Needed Shift: Enabling economic empowerment, fostering innovation in emerging markets.

This is a great and welcomed paradigm shift, one that needs a much more nuanced and thoughtful approach.

Protection or Protectionism?

Others claim that only tough regulation will keep consumers safe from the crypto market’s built-in dangers. As someone who has worked for decades in consumer protection, I get it. Too much regulation becomes protectionism, protecting legacy players from new entrants and preventing new markets from entering the global crypto economy.

The UK government claims to seek a balance between busting illegal activities, while encouraging legitimate innovation. How do you strike that balance? How can you ensure that your regulations promote innovation? What rules and practices are you implementing to make sure you’re not building walls for the people that actually need Web3 the most.

I have a nagging feeling that the UK's approach is prioritizing the "peace of mind" of institutional investors over the needs of individual artists and entrepreneurs in Southeast Asia. That’s a risky gamble to make, one that would play out in unfortunate and unintended ways for the long-term success of Web3.

We should look beyond just the direct impact of a tokenized, blockchain-based economy. The UK's focus on regulation seems to be overshadowing discussions about the potential impact on jobs, the role of AI, and other critical societal and economic factors. What happens if these regulations crafted so carefully to meet the needs of today’s market are utterly outdated in five years’ time?

These uncertainties are compounded by the FCA’s slow response and the prospect of a two-year registration process kicking in after 2026. Businesses are right to consider alternative jurisdictions. What of the people who aren’t able to afford to spend hours figuring out convoluted regulatory mazes?

For the UK, it’s high time to reconsider its stance and approach towards crypto regulation. Second, it needs to respond with constant awareness of the broader societal and economic effects. Further, it needs to pay attention to the voices of those most impacted by its decisions. Otherwise, it risks falling prey to Web3 aspirations of Southeast Asia’s youth and continuing a cycle of economic inequity.

We’d love to hear your ideas, so help us kick off this discussion!