Interoperability without a race to the bottom
Regulatory alignment is worth having only if it raises the floor. This paper examines mechanisms that achieve interoperability without converging on the weakest available standard.
Infrastructure crosses borders; regulation does not. The resulting fragmentation produces forum-shopping, genuinely incoherent obligations for organisations attempting to comply in good faith, and a floor of protection set by whichever jurisdiction cares least.
The usual remedy is harmonisation. The usual result of harmonisation, where the parties have unequal enthusiasm, is convergence on the least demanding common position. This paper examines mechanisms that deliver interoperability without that outcome.
Three mechanisms
Mutual recognition of audit, not of standards
Recognising another jurisdiction’s audit process rather than its substantive standard preserves local requirements while removing duplicated assessment cost. It also creates a direct incentive to maintain audit quality, since recognition can be withdrawn.
Shared technical specification beneath differing legal regimes
Much of what makes compliance expensive is not the obligation but its expression. Common technical specifications — logging formats, disclosure schemas, audit interfaces — reduce cost substantially while leaving each jurisdiction free to demand more.
Regulator-to-regulator technical cooperation
The most immediately available of the three. Shared technical capacity across authorities that individually cannot justify the headcount is achievable without a treaty, and addresses the constraint that most limits enforcement.
A design principle
We suggest alignment mechanisms be assessed against a single question: does this make it easier for a jurisdiction to demand more than its partners, or harder? Mechanisms that make divergence upward expensive will produce convergence downward, whatever their drafters intended.
