Blindly replicating Western crypto rules without the supporting institutional architecture will increase economic costs and reduce innovation in emerging markets

We hear the same question being asked in every conversation around regulation in emerging markets: what are Washington and Brussels doing? Reasonable question, wrong place to start.

For three decades, waves of regulation well designed for legacy economies have been exported into the unique landscapes of emerging markets. Basel I, II and III moved across Asia, Africa and Latin America, each cycle importing capital-adequacy and stress-testing requirements built around the risk profiles of large Western banking systems. Anti-money-laundering regimes shaped by the Financial Action…