Four Deloitte experts in the realm of blockchain and digital assets, Tim Davis, Rob Massey, Brian Hansen, and Wandy Henry, spoke to The Pavlovic Today about the burgeoning industry.
As the Global & US Risk & Financial Advisory Blockchain & Digital Assets Leader at Deloitte, Tim Davis commands an extensive realm of regulatory and risk controls, internal audit, and cybersecurity. But his authority goes beyond the standard purview of the financial realm, as he and his team have been immersed in the digital currency MIT for several years now.
Meanwhile, Rob Massey, the Global & US Tax Blockchain & Digital Assets leader at Deloitte, has dedicated a decade to navigating the intricate field of tax for blockchain, encompassing a range of companies from fledgling startups to industry behemoths. He has been deeply involved in blockchain, digital assets, cryptocurrency, and tokenization since 2013.
Then there’s Brian Hansen, who serves as both the US audit & assurance blockchain & digital assets leader and the group partner in charge of the Bay Area Audit & Assurance practice. Hansen’s strategic initiatives span every aspect of the marketplace, from resources to eminence building, as he draws on over 25 years of experience serving clients in digital assets, securities, banking, FinTech, investment and asset management, and specialty finance.
And then there is Wandy Henry, the Global Consulting Blockchain and Digital Assets Lead at Deloitte, who is working alongside clients to discern and assemble solutions that fit seamlessly into this space. Wandy has been immersed in the world of blockchain and digital assets since 2013.
All four experts sat down with Ksenija Pavlovic Mcateer to discuss their views on the state of the crypto industry.
According to Hansen, blockchain technology is expanding rapidly, with new protocols in development, including layer two technology and decentralized protocols. An increasing number of corporations are exploring the use of programmable money, examining commercial activities and smart contracts to replatform elements of their business model. Despite market volatility, people are still experimenting with digital assets, indicating a level of maturity and belief in the technology. The financial services industry and banks, the most regulated of Hansen’s client base, are also getting involved. “That’s probably a nod to where they see things going from a CBDC standpoint, right?” he said, referring to central bank digital currencies. “If you believe that that’s coming soon, in a while, I’m starting to build an experiment now with digital assets in some form, so that you can sort of plug in the systems and get ready for that. So it seems like a heavy level of engagement from all industries.”
Tim Davis expressed his concerns about the country’s lagging performance in crypto innovation. “I just don’t think the United States does so well in innovation,” Davis opined, noting that despite a groundswell of interest in the blockchain and digital asset space among retail consumers and even regulated institutions such as banks, there remains a dearth of regulatory clarity that is impeding progress. “It’s very clear that everyone’s looking for more clarity,” Davis observed, adding that as soon as the industry gets the regulatory clarity it needs, there will be a massive influx of capital that will further drive the industry’s growth. “I think there’s going to be this huge push forward in terms of additional capital sort of coming into the space that will build on that clarity, to further build the industry,” he predicted.
Meanwhile, Rob Massey offered his view of the industry’s prospects. “When you think about the level of investment that has happened over the last couple of years in this ecosystem, there are a lot of companies that are significantly building their operations and also have plans of going public,” Massey said, pointing to the impressive growth of the blockchain industry. However, Massey also acknowledged that there is a pressing need for greater clarity and assurance in the industry. “There are a lot of companies that are looking for clarity on the path to that endpoint,” he noted, adding that his firm is prepared to help clients in every sector of the industry navigate the challenges and opportunities presented by blockchain and digital assets.
Blockchain technology is rapidly gaining traction across industries, as leaders recognize its potential to drive efficiencies and innovation, according to Wendy Henry, a prominent commentator on the subject. “Industry is really beginning to understand the power that this technology is going to bring to implement change and implement solutions that they haven’t been able to do in the past,” she observed. While digital assets such as cryptocurrencies and NFTs have drawn much attention, Henry pointed out that firms are also exploring the use of blockchain to streamline back-office processes and reinvent their businesses. “People are starting to get their heads around this,” she said. “They’re really starting to innovate in very, very creative ways to use this technology to reinvent themselves. So it’s actually really cool at this point.”
Blockchain experts welcome Biden’s EO
As the blockchain industry surges ahead with rapid growth and widespread acceptance, regulatory clarity has become increasingly important to ensure the sector’s continued success. Blockchain experts have welcomed the White House’s executive order mandating collaboration between different regulatory agencies to oversee digital assets, given the complexity of the regulatory landscape in the US.
“It was hugely encouraging, just to see the White House advocate for this whole of government approach, right, because the US is so complicated in terms of the number of agencies that have a regulatory authority over digital assets, and they don’t all have the same point of view on how this space should be regulated.
So I would say that it is very important that the White House’s sort of mandating this collaboration between different agencies to come up with points of view,” noted Tim Davis.
The White House’s executive order mandating collaboration between different agencies to regulate digital assets has been welcomed by blockchain experts.
“It was hugely encouraging, just to see the White House advocate for this whole of government approach,” said Tim Davis, a blockchain expert. “The US is so complicated in terms of the number of agencies that have a regulatory authority over digital assets, and they don’t all have the same point of view on how this space should be regulated.”
According to Davis, the mandate for collaboration is especially important given the number of agencies involved in digital asset regulation. Meanwhile, Wendy Henry, a leader in Deloitte’s blockchain and digital assets practice, noted that the executive order highlights the importance of the US CBDC (central bank digital currency) in the policy framework that President Biden is putting forward.
“So we’re really anxiously looking forward to these reports that are due to come out in October,” said Henry. “And I do think that will lay the framework for continued debate.”
The bipartisan Financial Innovation Act introduced by Senators Loomis and Gillibrand is also seen as a positive step forward in digital asset regulation. “It’s taken a little bit of time for legislators to sort of get their head around this, but it’s now that important,” said Davis. “And they have that many representatives from their jurisdictions that are telling them that it’s important that, you know, we’re seeing a level of engagement, I think, with regulators now that they understand that we do need only regulation, but we need responsible regulation, because if we go too far, this industry will continue offshore.”
Digital Asset industry grapples with taxation challenges
As the digital asset industry continues to grow and mature, questions around taxation have become increasingly important. With the IRS taking a closer look at digital assets and their tax implications, there is a need for a fair tax code that ensures that consumers are not overtaxed and that the industry is not stifled by excessive regulations. In the rapidly evolving world of digital assets, tax policies in the US can be unclear and vary from other parts of the world.
According to Rob Massey, many Americans don’t know how to report taxable events on their tax returns, and this lack of clarity can lead to overtaxation. However, clarity on the definition of broker, covered security, and digital assets can help with compliance.
Regarding fair taxation, there are important policy decisions to be made, especially in areas like staking rewards, which can be considered property or service income. As Congress considers the drivers of the digital asset industry, according to Massey it’s important to acknowledge the differences and make decisions that drive innovation and participation.
While fair taxation is one question, clarity and transparency around tax policies is critical Rob Massey pointed out.
As Massey said, “Fair is relative. Let’s just make sure there’s clarity about how we want it in a way that people feel like it’s appropriate.”
Wendy Henry highlights the importance of diversity and inclusion in the cryptocurrency and blockchain industry
Cryptocurrency and blockchain industry has been largely dominated by men, with women making up a small minority of the industry’s participants. Wendy Henry shared her insight about the importance of diversity and inclusion in the industry and the need to create a more welcoming environment for women.
According to Wendy Henry, a leader in Deloitte’s blockchain and digital assets practice, despite more women entering the industry, there is still work to be done to create a more welcoming environment for underrepresented groups. Deloitte has made diversity, equity, and inclusion a priority, recognizing the need for diverse skill sets to drive innovation in the sector.
“It’s just using the art of the possible and knowledge,” Henry said, dispelling the notion that the industry is only for “techno geeks.” Henry also emphasized the need for diverse skill sets in the industry for it to be successful. “When I look around the conference, I am starting to see more female participation, and Bitcoin 2022. I was pleasantly surprised.”
With the increasing involvement of women and underrepresented groups, and the prioritization of these values by industry leaders such as Deloitte, there is cause for optimism. By embracing diverse skill sets and perspectives, the industry can drive innovation and growth in new and exciting directions.
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