Cryptocurrency and blockchain technology are becoming more popular in the financial world. The regulatory framework of cryptocurrency is evolving rapidly. Crypto regulations provide clarity, prevent fraud and protect market participants. Let’s discuss how crypto regulations are shaping the future of these digital assets.
- The European Union
The European Union was one of the first regions to develop significant crypto regulations with the introduction of the Markets in Crypto-Assets (MiCA) Regulation. When MiCA was passed, this helped to shore up price levels for all digital assets as it represented regulatory clarity, something that had been missing in Europe for digital assets. Rules and regulations for crypto platforms have been clearly defined here. The European Union reached a policy consensus in October 2022 on the MiCA Regulation. It has been ratified by the European Parliament and thus becomes the first regulatory framework for cryptoassets in the world. MiCA covers issuers and service providers, with the aim of protecting consumers and investors.
- The United States
Although the Securities and Exchange Commission (SEC) is the powerful regulator, Treasury’s FinCEN, Federal Reserve Board and the Commodity Futures Trading Commission (CFTC) have issued their own guidance. SEC often views many cryptos as securities, CFTC calls bitcoin a commodity and treasury calls it a currency. To put right their differences the President’s Working Group and the Financial Stability Oversight Council play important roles in the development of a future regulatory framework. The Biden Administration is also taking a hard stance on crypto regulations, aiming to tackle illegal cryptocurrency activity.
Switzerland is known as a cryptocurrency-friendly nation. Switzerland’s financial market regulators, The Swiss Financial Market Supervisory Authority (FINMA) have defined licensing requirements for crypto businesses of all types including bitcoin kiosk operations. In July 2021 Switzerland implemented the Federal Act on the Adaptation of Federal Law to Developments in Distributed Ledger Technology (DLT Act).
- The Bahamas
The Digital Asset and Registered Exchanges Act, 2020 (DARE) was enacted in the Bahamas in December 2020. DARE creates a legal framework to regulate the issuance, sale and transfer of digital assets such as crypto assets. The Digital Assets and Registered Exchanges Rules was enacted in March 2022 to provide AML rules for digital assets businesses.
Canada has approved Bitcoin exchange-traded funds. Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) have issued guidance requiring crypto-traded platforms and dealers in Canada to register with the provincial regulators. In 2021 Canada adopted a clear regime for trading platforms.
Germany’s Federal Financial Supervisory Authority (BaFin) and the National Competent Authority are responsible for financial services regulation and supervision and working since 2013 to ensure the country is attractive for market participants engaging in crypto assets. Crypto assets are regulated instruments and treated as financial instruments under the legislative and regulatory regime. Crypto assets are regulated by the German Payment Services Supervision Act (ZAG).
The Japanese Financial Services Agency (FSA) regulates cryptocurrency in Japan. It works with the Japan Virtual Currency Exchange Association (JVCEA) and the Japan Security Token Offering Association (JSTOA) for regulatory purposes The JVCEA creates rules and policies for crypto exchange service providers while the JSTOA supervises token offerings and other crowdfunding events.
Singapore has emerged as a model nation when it comes to adopting a balanced regulatory and legal framework for cryptocurrencies and entities dealing with them. The country’s financial regulatory body, The Monetary Authority of Singapore (MAS) has been tasked with monitoring risks associated with crypto-related transactions. In January 2020 MAS introduced the Payment Services Act (PSA) as an overreaching regulatory structure for crypto exchanges. This act brought all payment-related services under a single legislation.
Mauritius has a well-established digital asset regulation that serves as an example for all of Africa. In 2021 Mauritius released its first crypto-licensing document, the Virtual Asset and Initial Token Offering Services (VA) Act. The VA Act revolutionized crypto laws in Mauritius, establishing a more sophisticated, fair and secure regulatory system to deal with Africa’s digital asset market. As one of the first crypto licenses in Africa, it established several safeguards that would keep up with the pace of Africa’s ever-evolving digital asset market.
The Central Bank of Bahrain (CBB) drafted a number of regulations and guidelines to help conduct all crypto-asset-related activities in a smooth manner. In 2019 CBB issued a framework for a range of crypto-related activities, officially establishing rules for licensing, governance, risk management, Anti-money laundering standards, reporting, security and other rules for cryptoassets.
Cryptocurrencies have come a long way since the introduction of Bitcoin. As the crypto industry continues to evolve, the regulatory framework for digital assets has been increased and different countries have different crypto regulations. It would appear that there is a global shift that will see the crypto space becoming more strictly regulated to protect investors and reduce illegal activity.
Frequently Asked Questions (FAQs)
Which country likes crypto most?
Switzerland is one of the most crypto-friendly countries in the world.
What are the countries where cryptocurrencies are banned?
China, Bolivia, Bangladesh, Egypt, Morocco, Nepal, Qatar and many more.
Is crypto legal in China?
All cryptocurrency-related transactions are illegal in China.