At the 2024 Proof of Talk event in Paris, France Jenny Johnson CEO of Franklin Templeton and Mo Shaikh the founder of Aptos explained the protocol economy’s impact on regulators.

Key Insights from the 2024 Proof of Talk Conference: The Protocol Economy and Financial Inclusion

The 2024 edition of the Proof of Talk conference, held in the historic Louvre Palace in Paris, brought together leading figures from the Web3 and blockchain industry. Among the notable sessions was a mainstage fireside chat titled "What it Takes to Win in the Protocol Economy," featuring Jenny Johnson, CEO of Franklin Templeton, and Mo Shaikh, founder of the Aptos blockchain network. The discussion highlighted critical topics such as financial inclusion, regulatory challenges, and the evolving landscape of the protocol economy.

Financial Inclusion in the Protocol Economy

Jenny Johnson on Financial Accessibility:
1. Reducing Costs: Johnson emphasized that traditional financial services are often too costly for many individuals, particularly in underserved regions. She highlighted that decentralized financial services can lower these costs, making financial inclusion more attainable. With decentralized platforms, individuals with as little as $10 can open accounts, providing broader access to financial services.

2. Expanding Financial Services: Johnson pointed out that beyond basic banking, decentralized systems could offer services like investment and retirement planning. This is particularly crucial as populations live longer and need more sophisticated financial planning tools.

Mo Shaikh on Digital Financial Participation:
1. Breaking Physical Barriers: Shaikh noted that many individuals are not "unbanked" in the traditional sense but are excluded from the digital financial economy due to physical barriers. With the proliferation of mobile devices, people can now access financial services remotely, fostering greater economic participation.

2. Borderless Financial Flow: The ability to use mobile devices for financial transactions enables a borderless economic flow, allowing individuals to participate in the global economy irrespective of their physical location.

Regulatory Challenges and Developments

Jenny Johnson on Global Regulatory Approaches:
1. European and Asian Models: Johnson highlighted the progress of the European Union with its Markets in Crypto-Assets Regulation (MiCA) and Singapore's "sandbox approach." These frameworks allow for the trial and development of blockchain technologies within a regulated environment, promoting innovation while ensuring consumer protection.

2. Proactive Regions: She mentioned that regions like Hong Kong and the UAE are actively attracting blockchain companies by creating favorable regulatory environments. These areas are positioning themselves as hubs for blockchain innovation.

U.S. SEC's Approach:
1. Cautious Progress: Johnson remarked that the U.S. Securities and Exchange Commission (SEC) is moving cautiously, driven by a fear of making regulatory mistakes. The complexity of defining what constitutes a security in the crypto space is a significant concern.

2. Focus on Education: She underscored that the SEC is focused on educating itself and getting the regulations right, with a primary mandate to protect consumers.

Mo Shaikh on Regulatory Evolution:
1. Adapting to New Markets: Shaikh echoed Johnson's sentiments, noting that regulators globally are adapting to the new market dynamics introduced by digital assets. He emphasized the need for regulators to develop the necessary tools and internal capabilities to oversee the rapidly evolving industry.

2. Building Capabilities: Shaikh highlighted that financial institutions and regulators are building internal capabilities to better understand and regulate digital assets, ensuring a more stable and secure market environment.

Conclusion

The discussions at the Proof of Talk 2024 conference underscored the transformative potential of the protocol economy in promoting financial inclusion and reshaping regulatory frameworks. Jenny Johnson and Mo Shaikh provided valuable insights into how decentralized financial services can lower costs and expand access to financial tools, thereby fostering greater economic participation. They also highlighted the need for adaptive and informed regulatory approaches to ensure the growth and stability of the blockchain industry. As the protocol economy continues to evolve, these conversations will be crucial in guiding its development and integration into the broader financial system.