INATBA Releases Critical Policy Paper on Web3 Regulation
A new policy paper from the International Association for Trusted Blockchain Applications is pushing back against what it calls regulatory overreach in the Web3 space. The document, co-authored by five experts including IOTA Foundation’s Giannis Rousopoulos, argues that current regulatory approaches are conflating different aspects of the digital economy.
I think the paper makes a fairly straightforward point: treating all tokenized assets as financial securities might actually hinder innovation rather than protect it. The authors suggest that regulators are applying traditional financial frameworks too broadly to decentralized technologies that operate differently.
The Problem with Regulatory Conflation
What’s interesting here is how the paper breaks down the confusion. According to INATBA, regulators are mixing up the distributed ledger technology itself with what’s actually being recorded on it. Tokenization, they argue, is just a new method for keeping digital records – it doesn’t change the legal nature of the underlying asset.
Take real estate, for example. If multiple people jointly purchase property through traditional contracts, that’s not considered a financial product. But if you use blockchain tokens for the same arrangement, suddenly regulators want to treat it as a security requiring financial reporting. The paper questions why the technology should change the legal classification.
Co-chairs Jean-Christophe Mathonet of ProSquare and Izzat-Begum B. Rajan of Imani Partners put it this way: the principle of “same activity, same regulatory outcome” works for traditional markets but doesn’t fit decentralized business models well. Perhaps they have a point there.
IOTA Foundation’s Regulatory Engagement
As a founding member of INATBA, the IOTA Foundation has been pretty active in these policy discussions. Their legal team, including former Director of Legal and Regulatory Affairs Anja Raden, has co-authored several papers covering decentralized finance, NFTs, and autonomous organizations.
They’ve also provided feedback to the European Commission on various regulatory packages, including the Markets in Crypto Assets (MiCA) regulation. This involvement reflects a broader commitment to ensuring regulations accommodate decentralized technologies while still maintaining market integrity.
What strikes me about this whole situation is the timing. As frameworks for digital assets continue to evolve globally, there’s a real risk of getting the regulatory approach wrong from the start. If regulators treat everything as a financial instrument, they might miss the actual innovation happening with tokenization of real-world assets.
The paper uses the example of commodities or infrastructure rights being tokenized. These represent property interests, not financial securities in the traditional sense. Yet current regulatory trends seem to be heading toward blanket classification.
Maybe this paper will help policymakers see the distinction more clearly. Or perhaps it’s just one voice among many in an ongoing debate. Either way, it’s worth paying attention to how these regulatory discussions develop, especially with organizations like IOTA Foundation actively participating in the conversation.
Their involvement suggests that blockchain projects are taking regulatory engagement seriously, which might be a positive sign for the industry’s maturity. Still, whether regulators will listen remains to be seen.
