Financial Regulation 2.0 – Great Thought Leadership

I recently read a great post by Fred Wilson talking about regulation 2.0:

Regulation 2.0 is a framework that we have been working on with a bunch of others who are rethinking what government means in a networked world. In the Regulation 1.0 world (the one we are in now) regulators are required to give you permission to do things. In a Regulation 2.0 world, as long as you report openly and transparently about what you are doing to the government and everyone else, you are free to innovate and operate. But you are accountable to live up to the rules that are set by the regulators and the data you report about your actions will be measured against those rules.

Regulation 2.0
Regulation 1.0 Vs 2.0

A Google search for Regulation 2.0 suggested this is a new term. The recent Cyprus Bailout which threatens financial stability in Europe, and the recent new regulation guidelines around bitcoin, show that that a discussion on how financial regulation should work on the internet is more important than ever.

As an ‘activist in residence’ at USV, Nick Grossman, deals with several industries in his presentation about peer networks and regulation 2.0. I believe (though I am a bit biased) that the main discussion should be about financial regulation 2.0 .

This is a great initiative. There is no doubt the values presented for Regulation 2.0 are more aligned with the social web, and the era of information networks. The question is how do we get from 1.0 to 2.0. 

Like in the startup world, it seems that the jump from 1.0 to 2.0 does not happen through the incumbents adopting new technology, but rather through new and innovative companies that don’t need to “fight” the various policies and procedures already in place in the 1.0 companies. In regulation that would suggest we should  build new regulators; ones that are data driven and innovative, lead by geeks and quants, that deal only with companies which provide full data API access.

Think about reinventing investing in the network era, where innovative and agile thought rules, new transparent capital markets, new social investment networks, accountable investors, VC’s that invest billions in the new public markets, real time KPI’s in addition to quarterly financial statements, everything as APIs, everything global, everything open, everything on the internet.

Everything settled in bitcoin 🙂

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The Official Agreement for a Financial Assistance to the Republic of Cyprus

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