Regulation of #crypto around the world is a fact. Some places moving faster than others, some failing int heir approach by lack of information about what this ecosystem is all about. Giving the latest news, I found important to provide an update on where we are on regulation policies around the world. (Information from the last 30 days)
UNITED STATES & CANADA
UNITED STATES:
At mid April, the EU Parliament voted 517 in favor and 38 against to pass the Markets in Crypto Act, or MiCA. The legislation, which seeks to reduce risks for consumers buying crypto assets, will mean providers can become liable if they lose investors’ crypto-assets.
The rules will impose a number of requirements on crypto platforms, token issuers and traders around transparency, disclosure, authorization, and supervision of transactions. Platforms will be required to inform consumers about the risks associated with their operations, while sales of new tokens will also come under regulation.
Parliament also cleared a separate law which aims to reduce the anonymity involved in transfers of cryptocurrencies like #bitcoin and stablecoins, voting 529 to 29 to pass the Transfer of Funds regulation.
After the lawsuit aghainst #Binance by the US regulator ath the beggining of April, In a tweet, Changpeng Zhao, CEO of Binance, said his company was “ready to make adjustments to our business over the next 12-18 months to be in a position of full compliance.”
CANADA:
The situation in Canada is more complicated. The latest news is the decistion of Binance to pull out from operating in this country.
The move came after Canada unveiled new guidance that requires crypto trading platforms to have regulatory approval before allowing customers to buy or deposit stablecoins.
Binance would’ve been required to pass the CSA’s due diligence checks before being approved to allow customers to buy or deposit stablecoins. As Bloomberg reports, Binance’s Canadian affiliate had begun to register itself for the diligence checks in March before deciding to pull out.
On Tweeter, Chanpeng Zhao CEO of Binance and a Canadian citizen, said: “We had high hopes for the rest of the Canadian blockchain industry. Unfortunately, new guidance related to stablecoins and investor limits provided to crypto exchanges makes the Canada market no longer tenable for Binance at this time.”
“We put off this decision as long as we could to explore other reasonable avenues to protect our Canadian users, but it has become apparent that there are none… We are confident that we will someday return to the market when Canadian users once again have the freedom to access a broader suite of digital assets.
LATIN AMERICA:
BRASIL:
Arguably, one of the most prominent and recent developments in the cryptocurrency industry in Latin America was the signature of the cryptocurrency regulation bill by the president of Brazil by the end of 2022. The new law legalizes cryptocurrency payments for goods and services but does not grant them legal tender status. This will allow financial institutions in Brazil to provide cryptocurrency payment services. The new Brazilian legislative framework will also regulate the operation of cryptocurrency service providers, i.e., exchanges, custody platforms, and asset managers.
According to beggining of March 2023 news report, Joo Pedro Nascimento, President of the Securities and Exchange Commission (also known as the CVM in Brazil), stated that “cryptoeconomics” would coexist with the traditional economy. He also mentioned that the decree will most likely give the CVM the authority to determine which tokens are securities.
All crypto assets that meet the definition of security are expected to be regulated by the CVM. The central bank will be the regulatory body to take care of tokens that are not classified as securities.
According to the CVM CEO, crypto regulation has been well received by the industry thus far. He also mentioned that the CVM is working on an Open Capital Market decentralized finance (DeFi) project. The CVM was collaborating with the central bank on the project.
EL SALVADOR:
El Salvador, which became the first country in the world to recognise Bitcoin as a legal tender more than two years ago, has approved a law that would regulate the issuance of other digital assets by both the state and private entities.
The bill, backed by ruling party lawmakers allied with President Nayib Bukele, aims to attract national and foreign investors while creating new financing opportunities for citizens, companies and the government.
The 47-article law received 62 votes in favour out of 84 seats in Congress on Wednesday.
“The purpose of this law is to establish the legal framework that grants legal certainty to transfer operations to any title of digital assets used in public issuance offers,” according to the legislation.
Public offerings may be made by issuers using existing digital assets, with the opportunity to create new ones through them, the law indicates.
The law also establishes the creation of the National Commission for Digital Assets and the Bitcoin Funds Administration Agency, which will be in charge of managing, safeguarding, and investing the funds from public offerings of digital assets carried out by the government.
ARGENTINA:
By the end of 2022, Argentine Government Created the National Blockchain Committee
The initiative seeks to promote the development of public policies and technological solutions based on blockchain technology.
The committee will bring together agencies and entities of the Argentine public sector that can help develop blockchain technology.
The new committee will function under the Argentine secretariat of public innovation, an agency created in 2019 to design policies that promote openness and innovation and digital government.
After FTX crash, the country’s local regulator, known as the Comisión Nacional de Valores (CNV), is studying launching requirements on crypto companies, such as proof of solvency, said the people, who asked not to be named discussing the plans. The CNV is planning as it awaits a congressional vote that could give it oversight authority of the crypto sector in coming weeks.
“The regulation will focus on exchanges, not tokens. The regulation will come into effect progressively, after the Congressional bill is approved,” CNV President Sebastian Negri said in an interview. “We will set up a working group with the industry to agree on the new regulatory parameters, which will include that companies comply with requirements of assets and solvency to back the risk these assume.”
In Mendoza province, it was allowed to pay taxes and governmental fees using cryptocurrencies. This initiative is part of the Buenos Aires digitization program, under which the capital city also started to accept public financial transactions in cryptocurrency. The use of blockchain by Buenos Aires won’t be limited to payments only: it will encompass the use of distributed ledger technology as a database for storing individuals’ digital IDs and personal information.
PANAMA:
With comes and goes during the entire 2022, Panama's crypto bill saga has reached a new chapter, with the country’s Supreme Court set to decide the future of the local crypto industry.
Panamanian President Laurentino Cortizo on Januanry 26 sent the crypto legislation passed last year to the high court for review, claiming the so-called “crypto bill” violates the constitution’s core principles and is unenforceable.
The Supreme Court must now decide whether to declare Bill No. 697 unenforceable or to approve it with modifications.
According to an official statement, the president’s office considers articles 34 and 36 of the bill unenforceable because they violate the state’s separation of powers and establish administrative structures within the government.
President Cortizo also argued that the bill had been approved through an inadequate procedure following his partial veto of the legislation in June. At the time, the president argued that the bill needed more work to comply with new regulations recommended by the Financial Action Task Force aimed at improving fiscal transparency and preventing money laundering.
ASIA:
CHINA:
China classifies cryptocurrencies as property for the purposes of determining inheritances.
The People’s Bank of China (PBOC) bans crypto exchanges from operating in the country, stating that they facilitate public financing without approval
Furthermore, China placed a ban on Bitcoin mining in May 2021, forcing many engaging in the activity to close operations entirely or relocate to jurisdictions with a more favorable regulatory environment.7 And in September 2021, cryptocurrencies were banned outright
However, the country has been working on developing the digital yuan (e-CNY). In August 2022, it officially began rolling out the next round of its central bank digital currency (CBDC) pilot test program.
HONG KONG: On the other hand, Hong Kong proposed rules that would let retail investors trade certain “large-cap tokens” on licensed exchanges, a stark contrast to mainland China across its border where crypto-related transactions are outright banned.
The city’s Securities and Futures Commission did not specify which large tokens would be allowed, though a spokesperson from the regulatory body said they would likely be Bitcoin and Ether, two of the biggest digital assets by market value.
Since China’s crackdown on crypto trading, the country’s web3 startups have largely given up on their home market and shifted focus abroad. Some of the more resourceful ones have opted to set up new bases in friendlier locations such as Singapore and Dubai, though they normally continue to keep developers in China to tap the country’s large pool of affordable tech talent.
With Hong Kong’s introduction of a more relaxed regulatory environment for cryptocurrencies, some of these Chinese-founded web3 companies in exile might return and be closer to home.
JAPAN:
Japan takes a progressive approach to crypto regulations, recognizing cryptocurrencies as legal property under the Payment Services Act (PSA). Meanwhile, crypto exchanges in the country must register with the Financial Services Agency (FSA) and comply with AML/CFT obligations. Japan established the Japanese Virtual Currency Exchange Association (JVCEA) in 2020, and all crypto exchanges are members. Japan treats trading gains generated from cryptocurrency as miscellaneous income and taxes investors accordingly.
The country has been working on several aspects when it comes to regulation, including taxation. In September 2022, the government announced it would introduce remittance rules as early as May 2023 to prevent criminals from using cryptocurrency exchanges to launder money. The Act on Prevention of Transfer of Criminal Proceeds will be revised to collect customer information.
With tight regulations already in place that helped insulate FTX Japan and its investors from heavy losses, Japan is working on policy and guidelines for stablecoins, NFTs and DAOs as it welcomes a crypto future.
SOUTH KOREA:
In the 2022 South Korean Presidential election, Yoon Suk-yeol addressed the need for crypto regulation in his winning campaign.
Today, South Korea’s Financial Services Commission (FSC) is working on the Digital Asset Basic Act, expected to be introduced later in 2023, an all-encompassing effort to reduce crypto crime and bring more clarity to the legitimate players in the space.
The National Assembly is currently considering 17 different proposals that could help shape the act.
EUROPE:
EUROPEAN UNION:
Cryptocurrency is legal throughout most of the European Union (EU), although exchange governance depends on individual member states. Meanwhile, taxation also varies by country within the EU, ranging from 0% to 50%.37
Recently, the EU’s Fifth and Sixth Anti-Money Laundering Directives (5AMLD and 6AMLD) have come into effect, tightening KYC/CFT obligations and standard reporting requirements.38 In September 2020, the European Commission proposed the Markets in Crypto-Assets Regulation (MiCA)—a framework that increases consumer protections, establishes clear crypto industry conduct, and introduces new licensing requirements. It was provisionally agreed on in 2022.
In April 2023, Parliament approved measures that allow legislation requiring certain crypto service providers to seek an operating license. This legislation is intended to give regulators the tools they need to track crypto being used for money laundering and terrorism funding.
UNITED KINGDOM:
While there are no cryptocurrency-specific laws in the U.K., the country considers cryptocurrency as property (not legal tender), and crypto exchanges must register with the U.K. Financial Conduct Authority (FCA). Crypto derivatives trading is banned in the U.K. as well. There are cryptocurrency-specific reporting requirements relating to know your client (KYC) standards, as well as anti-money laundering (AML) and combating the financing of terrorism (CFT). Although investors still pay capital gains tax on crypto trading profits, more broadly, taxability depends on the crypto activities undertaken and who engages in the transaction.
As of Aug. 30, 2022, crypto exchange and custodian wallet providers must comply with the reporting obligations implemented by the Office of Financial Sanctions Implementation (OFSI). Crypto firms must notify the OFSI as soon as possible if they know or have reasonable suspicion that a person is subject to sanctions or has committed a financial sanctions offense.
In the last few days, the UK Treasury Committee seemingly opposed the government’s proposal to treat crypto as regulated financial activities, advising the goverment to treat them as gambling.
As detailed at Coindesk: "Investing in unbacked digital assets like bitcoin (BTC) and ether (ETH) resembles gambling and should be regulated as such, a cross-party lawmaker group in the U.K. has said. But the government is sticking by its plans to regulate them as financial services."
GERMANY:
The German regulatory environment has drawn praise for providing more clarity than a lot of regulators around the globe.
The regulator, BaFin, has published a set of medium-term goals which run out to 2025, including bringing increased regulation to DeFi and protecting consumers against unknown risks.
The European state also has favorable tax regulations regarding crypto. In May 2022, Germany’s parliament made the sale of purchased bitcoin and ether tax-free after one year for private individuals.
FRANCE:
France has emerged as a promising jurisdiction for cryptocurrency companies seeking regulatory stability and predictability. The formal approval of the MiCA rules within the EU positions France as a welcoming environment for firms looking to navigate the shifting regulatory landscape. By proactively creating a supportive ecosystem and attracting international players, particularly those facing regulatory uncertainties in the U.S., France aims to foster innovation and establish itself as a leading hub for the cryptocurrency industry.
As the global crypto landscape continues to evolve, countries around the world are grappling with the need to establish clear and effective regulatory frameworks. France’s emphasis on providing regulatory stability and predictability contributes to building confidence among market participants and facilitates the growth of the crypto industry within its borders. By embracing digital innovation and creating a conducive environment for crypto-related businesses, France aspires to play a prominent role in shaping the future of the cryptocurrency industry.
Thanks for reading! We will continue the update, adding more countries and a special focus on the African situation.
