As the past few years have been increasingly defined by fragmentation — geopolitically, economically, and technologically — the case for regulatory reciprocity is not only timely, but essential.
In times of heightened geopolitical tensions, it can be the political priority of nations to implement protectionist policies in order to defend national interests. Technological sovereignty, which can be defined as a nation’s or region’s ability to control and develop its own critical technologies, is a rising trend as nations are increasingly worried about being overly reliant on foreign providers and supply chains. Many jurisdictions are considering how they can have mastery and ownership of key technologies to maintain economic and societal well-being regardless of external developments. This isn’t only relevant to technology but can be seen in other sectors, for example such as during the COVID-19 pandemic where vulnerabilities were evidenced in nations which were relying solely on a small range of suppliers for essential provisions and vaccines.
The diverging national interests to rising economic protectionism mean that the forces pulling competing regions further apart are growing stronger. Yet the dichotomy is that digital finance is inherently global by design, and the technologies that underpin the future of finance are built to scale across borders, integrate with multiple systems, and enhance efficiency through decentralisation. Without mutual recognition of frameworks and standards, digitalisation risks fracturing before it has the chance to truly scale.
Recent key discussions with regulators and policy makers have seen a growing call for harmonisation. It is important to consider the barriers standing in the way of functional equivalence and to understand why regulators and innovators alike should pursue and embrace reciprocity as a core strategy for scaling digital markets.
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