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On the occasion of San Francisco Tech Week 2023, ServiceNow and HederaHashgraph co-hosted an event where many Web3 VCs, investors and angels held a discussion on the developing regulatory landscape of Web3. The 6-member panel consisted of distinguished industry names— Chris Kelly, Christian Hasker, Shuchi Rana, Yaroslav Ivanov, Paige Xu and Manmeet Singh Bhasin. 
Chris Kelly is a lawyer-turned-investor who recently purchased the NBA team Sacramento Kings as a co-owner, and serves on the executive board. He has worked as the first General Counsel and VP of corporate development at Facebook. In 2010, he was the Democratic party’s candidate for Attorney General. Now, he is venturing into Web3 with his investment in the development platform, Alchemy. 
Christian Hasker is the CMO of Swirlds Labs, the marketing arm of HederaHashgraph, a public blockchain network. 
Shuchi Rana is the Chief Strategy executive at the VC fund ServiceNow Ventures and has also been on the governing council of Hedera blockchain. 
Yaroslav Ivanov is the co-founder and CEO of Alta, a blockchain laboratory and accelerator. He has long-time experience in DLT as the head of strategy and marketing at blockchain consultancy firms Blockchain Asia, Blockchain.com and EDC Blockchain. 
Paige Xu is an investment manager at OKX Ventures, the investment arm of OKX, a leading crypto exchange. 
Manmeet Singh Bhasin is another seasoned entrepreneur with 30-year experience&nbsp; in the tech industry. He is the founder and managing partner of Punja Global Ventures (PunjaVC), a VC fund focusing on blockchain-and-AI startups. He has invested in 10 blockchain projects. 
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<h2 class="wp-block-heading" id="strong-regulatory-compliance-and-grasping-traction-from-the-authorities-strong">Regulatory Compliance and Grasping Traction from the Authorities</h2> 
The speakers raised an unexpected point regarding the regulatory compliance systems worldwide. They say that even the authorities, sometimes, do want to get systemic incorporation of Web3, given there are actually useful applications, and mechanisms that don’t support illicit activities. 
Kelly talks about the challenges from regulatory compliance for the innovations happening in DeFi— “Structural moves like Bitcoin Lightning or Ethereum Virtual Machines, operating through companies like Polygon, trying to roll things up on-chain with Zero Knowledge Proofs, L1s working on <a href="https://www.thecoinrepublic.com/2023/07/12/onepieces-kezheng-jia-and-langrenus-joey-kong-on-defi-gamefi-and-socialfi/">suites of DeFi solutions</a>— I think that’s where the regulatory focus will (now) be. Because that’s where there’s the greatest degree of risk for companies trying to do things differently.” 
Citing the example of Coinbase, he then explains the regulatory uncertainty issue— “SEC went back on their crack-in of Coinbase, particularly on staking products. Even though they had reviewed Coinbase’s S1 (an IPO requirement for registering with the US SEC) and approved it for public trading, they say that they’re (Coinbase) offering unregistered securities on the platform through staking mechanisms. 
Everything should be approached with extreme caution in lending and related operations in the US right now. It is one of the reasons why sites like Coinbase are looking at Singaporean and Bahamian registrations.” 
Hasker talks about the regulatory headwinds in countries like Dubai— “One of our government council members, DLA Piper, helped the Dubai government to write the legislation for the digital asset framework that’s been adopted. There are a bunch of banks, who get counsel on Hedera, they’re looking at how they can leverage DeFi, specifically stablecoins, among banks for real-time settlement. 
Brands are also looking at how can they engage their consumers in new ways, such as with NFTs. Then there’s talk around sustainability, minting carbon emission tokens for carbon offsets. Writing emissions data in a standardized way to public blockchains, allows for a lot of incentivizations and innovations.” 
Rana agrees on the impact of ESG (Environment, Social and Governance) policies— “We’re seeing the most traction within our customers as well, with the launch of our ESG management product. We’re trying to see how we can integrate blockchain into it.” 
Paige stresses on building use-cases— “Hong Kong Monetary Authority works with Goldman Sachs on their DIP platform (Data Integration Platform). They just issued 8 Million tokenized green bonds in March. It’s the world’s first tokenized green bonds out there.” 
<h2 class="wp-block-heading" id="strong-geographical-hotbeds-from-a-web3-standpoint-strong">Geographical Hotbeds from a Web3 Standpoint</h2> 
Kelly is very positive about South Korea and Singapore— “There’s some pretty interesting Web3 opportunities developing in Singapore, and a great Web2 infrastructure ready to move on to Web3 in Seoul. They have a lot more distributed trust technologies operating, for example, companies like Neighbor. I think Europe is trying to get into the game in a big way by putting out positive regulatory guidance.” 
Hasker adds— “From a Web3 perspective, where there’s certainty around regulations, you see thriving ecosystems. When there’s uncertainty, it makes things lot harder.” 
Paige explains a more distinctive fact— “I think for different types of projects, different regions (are optimal). For example, for a developer community, Hong Kong is a hotspot right now because of government support. They’re putting $50 million in supporting, and are attracting startups from all around the world. They’ve built a government-based incubation center– Cyberport. The Hashkey WanXiang Week was a huge success. 
For the payments systems, Latin (America) is a great market because it’s an actual need there. But the problem right now is that it’s like a really inner circle market. If I want to navigate there, I need to know the local VCs. In Europe, <a href="https://www.thecoinrepublic.com/2023/08/17/mica-is-it-a-guiding-light-for-crypto-regulations-worldwide/">MiCA</a> (Markets in Crypto Assets Regulations) is super encouraging.” 
Bhasin adds, many jurisdictions might be ahead of others in terms of crypto adoption— “Certain countries in Europe, Dubai, Singapore, are at the top. I saw that in Singapore and Hong Kong, they were paying developers in Vietnam and Cambodia, in crypto. Other countries which have inflation want to invest in something different. So the crypto took up in all these places. 
We have invested in a few companies in Singapore and Europe, and those companies are getting very positive response from their regulation.” 
He also shares a striking scene going on in the EU— “Some European countries are giving a lot of grants, (like) Portugal and Spain. We are investing in a company, they’re giving them a 4 Million Euro grant if we invest 1.2 Million. (For example,) if you open up, maybe R&amp;D in those places, you might get a grant. I think the US has to change. Otherwise, crypto may completely go out of here.” 
Kelly resonated with it, “The US regulatory environment is, unfortunately, making it quite attractive to offshore token-based businesses.” 
He warns to beware of launching tricky and risky schemes over here— “Showing utility in businesses is one of the ways to affect things here. If there’s something that’s going to be more at the edge, I would definitely counsel against launching it here right now, until we get some more clarity.” 
Hasker clarifies the stance of Hedera— “I’m not saying move outside at all. We are here, and we’re committed to the US and to working with the regulators. But if you’re here, you’re taking a harder path, which may lead to a better outcome. If you can fret the needle on US regulations and come out the other side, you have a good chance of becoming really big.” 
Paige also clarifies that her stance is to diversify resource location rather than quitting the US altogether— “I think that the US regulations are really only affecting the exchanges, not the protocols per se. It’s really how it’s tested, whether you are like a security token that’s really affecting the operational business. 
I would diversify my partners, diversify my investors to include overseas exchanges and VCs. If you are just a project, you don’t have to launch tokens. And if you are token projects, you can issue a token on overseas exchanges who do not face US regulations.” 
She admits that the Silicon Valley in the US, despite regulatory challenges, has more <a href="https://www.thecoinrepublic.com/2023/08/24/blockchain-innovations-and-investments-chris-kelly-christian-hasker-shuchi-rana-yaroslav-ivanov-paige-xu-and-manmeet-singh-bhasin/">scope for Web3 entrepreneurs</a> than other parts of the world— “Honestly, Silicon Valley is still the hub for crypto. With Denver, Austin, we have the best builders in the world, in US.” 
Whether exerting restrictions or trying to partake in the <a href="https://www.thecoinrepublic.com/2023/06/26/in-conversation-with-coindesks-sam-ewen-on-web3-and-its-impact/">benefits of Web3</a>, the DLT is getting more traction with the regulators. Stakeholders must make sure their creations meet eye-to-eye with the regulations, and try to make it work for their case. Carefully leveraging variable geographical jurisdictions could go a long way. 
Disclaimer: The article is a transcription of the interview conducted by RJ Soniya Ahuja. No statement or comment in the article is a direct or indirect portrayal of the writer’s views or opinions. The interview does not intend to promote, demote or demean any organization or community. It also does not intend to give the readers any financial or investment advice.

Blockchain Regulatory Apprehensions For Entrepreneurs & Investors

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