Cryptocurrency Regulations are Changing across the Globe
According to the article, cryptocurrency has often been synonymous with a lack of regulation. However, this is rapidly starting to change, with governments around the world now considering rules for digital currencies.
https://www.weforum.org/stories/2024/05/global-cryptocurrency-regulations-changing/
For an excellent synopsis of changing cryptocurrency regulations in major countries and geopolitical regions, please see the following article.
Note: Please also see the above-referenced website for more information regarding regulatory issues including (but not limited to): (1) cryptocurrency licensing and registration requirements; (2) “fiat-back” stablecoin regulation; (3) consumer and investor protection; (4) the marketing and promotion of crypto-assets; and (5) the International Organization of Securities Commissions’ 18 recommendations for global rules on managing crypto and digital assets.
“Cryptocurrency Regulations are Changing across the Globe”
Regulation for crypto assets has been under consideration for some time, but there was a heightened sense of urgency after a series of bank collapses that were tied to crypto asset activities.
The incidents seem to have prompted the moves to propose accounting and reporting guidance for crypto assets, as Reuters reported last year. In the EU, rules were being worked on before the bankruptcy of crypto exchange FTX.
From U.S. legislation to British stablecoin regulation, here is a round-up of the latest regulatory changes for cryptocurrencies.
Is the U.S. “FIT” for the 21st Century?
In 2023, developments in the U.S. brought it closer to having a regulatory framework for cryptocurrencies. Since then, however, federal legislative efforts have generally stalled.
Two bills in particular, the Financial Innovation and Technology (FIT) for the 21st Century Act and the Blockchain Regulatory Certainty Act helped define when a cryptocurrency is a security or a commodity, expand oversight of the industry, and clarify the roles of different bodies in managing crypto. But while they have been introduced, they have not progressed further.
EU’s Cryptocurrency Regulation
The European Union introduced the world’s first comprehensive cryptocurrency regulations in May 2023, known as the Markets in Crypto-Assets Regulation (MiCA).
The European Security and Markets Authority is currently in a consultation process with the public on a number of measures.
Any company issuing or trading cryptocurrency will need a license, and from January 2026 all service providers will have to obtain the name of senders and beneficiaries, whatever the amount being transferred. Further, any self-hosted wallets holing over 1,000 euros will need to undergo wallet ownership verification for transactions.
The collapse of FTX underlined the “urgent need for imposing rules which will better protect Europeans who have invested in these assets and prevent the misuse of (the) crypto industry for the purposes of money laundering and financing of terrorism, said Elisabeth Svantesson, Finance Minister for Sweden, which holds the EU presidency.
Asian Digital Currency Laws
Asia is a leader in crypto use around the world, but regulations vary significantly among countries in the region.
Japan is open to crypto use, recognizing it as a type of money and as legal property. As such, crypto and yen transactions are both managed by the country’s Financial Services Agency, and citizens of the country are free to own or invest in crypto. The country has recently toughened its rules on sharing customer information between crypto exchanges, in an attempt to tackle money laundering.
South Korea is progressing with regulation for crypto and other virtual assets after the Virtual Asset Users Protection Act was passed in 2023. The regulation creates stronger protections for users by adding requirements around record keeping and transparency.
The financial authorities are set to publish guidelines for listing virtual assets by the end of April 2024, or in May, according to News 1.
China is one of the strictest countries when it comes to cryptocurrency, with bans on exchanges, trading, and crypto mining.
India also had a ban on crypto, but its Supreme Court removed it in 2020. Following this, a Cryptocurrency and Regulation of Official Digital Currency Bill has been scheduled to pass through parliament but faced delays. It would aim to enable the creation of an official digital currency by the Reserve Bank of India.
Brazil Crypto Rules
Brazil instated cryptocurrency regulation in June 2023, when it made the central bank the supervisor for crypto assets. The Cryptoassets Act sets rules for any company providing services linked to virtual assets, with a central aim of preventing scams related to cryptocurrency.
The regulation outlines what constitutes criminal practices in the use of crypto, and outlines penalties that will be enforced if crypto is used in fraud or money laundering.
Brazil’s central bank governor has since said he wants to impose tighter cryptocurrency regulation. This follows a near 45 percent rise in Brazil’s cryptocurrency imports in January to August 2023 compared with a year earlier, representing a total of 7.4 billion USD.
The Governor of Banco Central do Brasil, Roberto Campos Neto, said among the cryptocurrencies being used by Brazilians, local demand had shifted toward stablecoins, with people using cryptocurrencies more as a means of payment rather than just for investment.
Britain’s Crypto and Stablecoin Regulation
Britain is actively building rules for the crypto sector. Of note, it has mandated that any company offering a digital currency must be authorized by the country’s Financial Conduct Authority (FCA).
“The government’s position is that firms dealing directly with U.K. retail consumers should be required to be authorized irrespective of where they are located,” the finance ministry says.
The FCA and the Bank of England have also proposed regulations for stablecoins. Stablecoins are designed to be more stable in value than cryptocurrency by having their value tied to that of another asset.
The Bank of England says its regulation would aim to “harness the potential benefits stablecoins could provide to U.K. consumers and retailers, in particular by making payments faster and cheaper” while working to protect consumers by preventing money laundering and safeguarding financial stability.
What about Global Principles for Crypto Regulation?
The International Organization of Securities Commissions has laid out its 18 recommendations for global rules on managing crypto and digital assets.
It sees a need for greater consistency on the regulation and oversight of crypto assets activities given the cross-border nature of the markets, which creates “significant risk of harm” for investors.
The World Economic Forum’s Pathways to the Regulation of Crypto-Assets: A Global Approach describes international alignment on certain cryptocurrency rules as “not just desirable but necessary.”
“A global approach is needed to maximize the advantages from the underlying technology and to manage the risks,” the paper says. “However, given the different stages of market maturity, the development of regional hubs and the varying capacity of regulators, it is prudent to holistically focus also on the important role that international organizations and national/regional regulators as well as industry actors can play in ensuring responsible regulatory evolution.”
Teaching Tip 2 (Related to Video 1— “Delta Plane Flips on Toronto Runway”): “The Transportation Safety Board of Canada, the Federal Aviation Administration, and the National Transportation Safety Board”
For more information regarding the crucial roles of the administrative agencies involved in the investigation of this incident, please see the following websites:
The Transportation Safety Board of Canada:
The Federal Aviation Administration (FAA):
The National Transportation Safety Board (NTSB):
https://www.ntsb.gov/Pages/home.aspx
