Written by: Weilin, PANews
The year 2024 is particularly critical for global blockchain regulation, as the regulatory framework for the cryptocurrency industry is preliminarily perfected, and crypto assets are integrating into the mainstream financial system.
The approval of Bitcoin and Ethereum ETFs in the US has propelled the mainstreaming of cryptocurrencies. At the same time, the new government led by Trump is about to take office, with the new SEC Chair Paul Atkins set to take office, signaling a potential shift from the SEC's previous 'enforcement-based regulation' model to 'disclosure-based regulation'. The establishment of a White House director for AI and cryptocurrency affairs also indicates a more friendly, flexible, and innovative regulatory policy for cryptocurrencies.
In Europe, the stablecoin regulatory legislation (Markets in Crypto-Assets) (MiCA) has officially come into full effect, accelerating competition among crypto companies in the stablecoin sector. In the Asia-Pacific region, Hong Kong approved Bitcoin and Ethereum spot ETFs in April, and four new members joined the virtual asset exchange. In the stablecoin sector, Hong Kong launched a stablecoin sandbox and stablecoin legislation.
In other parts of Asia, such as Vietnam, the government has issued a (National Blockchain Development Strategy). In Russia, regulations on cryptocurrency mining have come into effect. Moreover, in the Middle East and North Africa, as well as in the Americas, the UAE, Qatar, and Argentina have also shown proactive policy innovations in cryptocurrency regulation.
At the end of the year, PANews reviews the significant regulatory progress in the global crypto market. Under different regulatory systems around the world, the crypto market is expected to present a completely different landscape next year.
United States: Approval of BTC and ETH spot ETFs and regulatory expectations from the new government
On January 10, 2024, the US Securities and Exchange Commission (SEC) approved the Bitcoin spot exchange-traded fund (ETF), and then on May 23 local time, it reversed its decision to approve the Ethereum ETF. On July 23, the US Ethereum spot ETF officially began trading. These two events mark a significant milestone in the US crypto investment field. The Bitcoin ETF and Ethereum ETF provide a scalable bridge between traditional finance and cryptocurrencies, becoming key integration points.
According to SoSoValue data, as of December 23 local time, the net assets of the US Bitcoin spot ETF totaled $105.08 billion, accounting for 5.7% of the Bitcoin market cap. The net assets of the US Ethereum spot ETF totaled $12.05 billion, accounting for 2.94% of the Ethereum market cap. The successful launch of these two ETFs has made it possible for more altcoin ETFs, such as Solana, Doge, and XRP ETFs, to apply, further promoting the maturity of the crypto asset market.
This year, two important pieces of legislation regarding US crypto regulation are also noteworthy. On May 22, 2024, the US House of Representatives approved the (Financial Innovation and Technology Act of the 21st Century) (FIT21), which aims to clearly define cryptocurrencies, classify specific cryptocurrencies to determine whether they are securities or commodities, and decide which government agency (SEC or Commodity Futures Trading Commission CFTC) will regulate them, and it is still under consideration.
Regarding another piece of legislation, SAB 121, on June 1, President Biden vetoed the bill aimed at overturning accounting standards set for companies holding cryptocurrencies in custody. The new year may bring changes with the new government taking office, facilitating the adoption of cryptocurrencies by more large companies.
After the US elections, the new government led by Trump is expected to initiate a new model of crypto regulation. Trump, a supporter of cryptocurrencies, has appointed several cryptocurrency-supporting politicians to key positions as he selects his new government appointees. For instance, on December 5, Trump officially nominated Paul Atkins as SEC Chair. On December 6, Trump announced the appointment of David Sacks as the White House Commissioner for AI and Cryptocurrency Affairs, marking the first establishment of this position. On December 23, 29-year-old political newcomer Bo Hines was appointed as the executive director of Trump's cryptocurrency committee. On December 13, French Hill was elected chair of the House Financial Services Committee. This series of appointments suggests that the US may adopt a more friendly policy in the field of crypto regulation in the future.
Europe: The effectiveness of the MiCA legislation and intensified competition in stablecoins
The EU's Regulation on Markets in Crypto-Assets (MiCA) concerning the regulation of stablecoin issuers came into effect on June 30 and will be fully implemented by December 30. MiCA is the first comprehensive regulatory framework by the EU for the crypto industry, particularly establishing clear requirements for the regulation of stablecoins. Although some crypto companies state they are not fully prepared, competition in the European stablecoin market is bound to intensify under increasingly stringent compliance requirements. For instance, the unlicensed Tether has already invested in the Dutch company Quantoz and the European stablecoin provider StablR.
Additionally, the UK's Financial Conduct Authority (FCA) has expressed its desire to launch a comprehensive regulatory system for cryptocurrencies before 2026. A study commissioned by the FCA showed that the holding of crypto assets grew by 4% over the past two years, with approximately 7 million adults holding crypto assets in the country's population of about 68 million.
On December 21, the German parliament passed the (Financial Market Digitalization Act), necessary for the full implementation of crypto MiCA.
Hong Kong: Four new VATP licensees added, promoting the development of stablecoins
On October 31, 2022, Hong Kong officially released a virtual asset policy declaration, and to date, nearly 1,000 Web3 companies have emerged in Hong Kong.
By the end of April this year, Hong Kong licensed six virtual currency ETFs under Huaxia Hong Kong, Bosera International, and Harvest International. Despite facing fierce competition from similar products abroad and needing to increase trading volume, they mark Hong Kong's key position in the global crypto regulatory framework.
On July 18, the Hong Kong Monetary Authority announced the first batch of three 'sandbox' participating institutions, including JD Coin Chain Technology, Yuan Coin Innovation Technology, and the joint application of Standard Chartered Bank (Hong Kong) and Animoca Brands Limited, Hong Kong Telecommunications (HKT). These three institutions can test their intended business models within a designated scope and communicate with the Monetary Authority on how to comply with the proposed stablecoin regulatory system in the future. Hong Kong's virtual currency license (VATP) system further promotes the compliant development of crypto asset service providers. On December 18, after OSL Exchange, HashKeyExchange, and HKVAX, four new members were added to Hong Kong VATP, including Cloud Account Greater Bay Area Technology (Hong Kong), DFX Labs, Hong Kong Digital Asset Trading Group, and Thousand Whales Technology.
On December 6, the Hong Kong government announced the long-awaited stablecoin bill, laying the foundation for comprehensive regulation of fiat-collateralized stablecoins (FRS). In the future, under a legally compliant regulatory framework, it is highly likely that Hong Kong will issue a stablecoin that can be widely used in investment, trade, payments, and other scenarios.
Advancements in Web3 policies and sandbox regulations in other parts of the Asia-Pacific region
On November 27, Japan's newly appointed digital minister Masaaki Taira announced at a forum that Prime Minister Shigeru Ishiba has restructured his party's Web3 and crypto policy-making department to further promote policy innovation in the crypto and blockchain fields. The government stated it has no intention of obstructing the 'promotion' of Web3-related businesses. The project group is a brainchild of former Prime Minister Fumio Kishida, who resigned earlier this year from his position as Prime Minister and leader of the Liberal Democratic Party. Ishiba has also expressed his support for policies that support Web3. The Japanese Liberal Democratic Party (LDP) is pushing for cryptocurrency tax reform. Proposed reforms include applying a separate tax rate of 20% on profits from cryptocurrency trading and introducing a loss carryforward system. Currently, profits from cryptocurrencies in Japan are classified as miscellaneous income, with a maximum tax rate of up to 55%.
In South Korea, on July 19, the country introduced a virtual asset user protection law aimed at enhancing investor protection and ensuring the future development of the market. However, shortly after the new regulations were implemented, political turmoil arose in South Korea, and after a state of emergency and plans to impeach the current president, the South Korean National Assembly decided to suspend all regulatory discussions related to cryptocurrencies.
At the same time, countries such as Indonesia, Thailand, and Vietnam are also strengthening regulations on the crypto market, particularly by introducing sandbox frameworks that allow innovative projects to experiment in a relaxed regulatory environment. Specifically, Indonesia's Financial Services Authority (OJK) launched a sandbox framework in June 2024. In August 2024, Thailand's SEC introduced a digital asset sandbox to complement its existing detailed licensing framework, allowing for testing key initiatives aligned with emerging market trends. The Vietnamese government announced its (National Blockchain Development Strategy) on October 22 through its official website, aiming to make Vietnam a regional leader in blockchain technology research, application, and innovation by 2030.
India's unfriendly regulatory policies towards the crypto market are also showing signs of easing. In January this year, exchanges such as Binance and Kraken had their apps blocked by India's financial intelligence agency for non-compliance with India's anti-money laundering rules and were removed from the Indian Apple App Store. However, in May this year, Binance and KuCoin became the first offshore crypto-related entities to receive approval from India's Financial Intelligence Unit (FIU), conditional on paying fines after hearings with the FIU.
Russia: Implementation of cryptocurrency mining regulations and adjustments to digital currency taxation
Russia implemented comprehensive cryptocurrency mining regulations effective November 1, 2024, establishing strict energy limits, mandatory registration, and regulatory requirements, providing a clearer legal framework for the industry. The new regulations formally incorporate cryptocurrency mining as a legal activity and set safety and operational standards for miners while requiring transactions of digital financial assets to occur on specific platforms. The regulations aim to balance the growth of the Russian crypto industry, energy demands, and control over illegal mining.
Under the new regulations, only registered enterprises and individual entrepreneurs can legally engage in cryptocurrency mining activities, and unregistered individual miners cannot exceed a monthly electricity consumption of 6,000 kWh; those exceeding this limit must register as entrepreneurs to continue mining. Additionally, on November 29, Putin signed a new digital currency tax law that clearly classifies digital currencies as property, exempting them from value-added tax and providing tax relief for cross-border settlements. Nevertheless, mining service providers are still required to report user information to tax authorities, with penalties for failure to report on time.
On December 4, Putin stated at the Russia Calling investment forum that it is impossible to ban the development of digital payment tools such as Bitcoin, emphasizing that the future of these new technologies will continue to move forward.
Middle East and North Africa: Rapid growth of the cryptocurrency market
In the Middle East and North Africa, the UAE's cryptocurrency ecosystem is growing rapidly, driven by regulatory innovation, institutional interest, and the expansion of market activities. Established in 2022, the Dubai Virtual Assets Regulatory Authority (VARA) provides a globally leading regulatory framework for the crypto industry and promotes its further development. Currently, 23 platforms have obtained VARA licenses, with 13 new licenses issued this year, including Binance, Bybit, OKX, and Derbit.
Saudi Arabia remains the fastest-growing country in the Middle East and North Africa for cryptocurrency economics. According to Chainalysis, the total on-chain value has increased by 154% compared to last year. This rapid growth is attributed to the country's continuous development in blockchain innovation, central bank digital currencies (CBDC), the gaming industry, and financial technology.
Following closely is Qatar, which has become the second fastest-growing crypto market in the region for on-chain value. The Qatari government previously banned the trading of crypto assets, but the regulatory policies are continuously being refined. The Qatar Financial Centre (QFC) launched a brand new digital asset regulatory framework in September this year, covering five aspects: the definition of digital assets, market entry and compliance requirements, technical standards and security guarantees, consumer protection and education, and international cooperation and standardization, laying a legal and regulatory foundation for the development of digital assets.
South Africa: The most friendly attitude among African countries, with 248 licenses issued
Among African countries, South Africa is one of the most crypto-friendly nations. The South African Reserve Bank (SARB) has not explicitly prohibited the use of cryptocurrencies.
As of December 16, 2024, the South African Financial Sector Conduct Authority (FSCA) has issued 248 licenses from the 420 applications received from crypto asset service providers (CASPs). According to a local report, 56 applications are still under review, and 9 have been rejected. Additionally, the report noted that after the FSCA questioned the business models of certain companies, 106 institutions withdrew their applications.
Americas: National policy innovations in cryptocurrencies
In the Americas, Argentina is vigorously promoting the adoption of cryptocurrencies. On October 22, Argentina's securities regulator (CNV) announced a public consultation on a draft aimed at regulating the operations of the country's virtual asset service providers (VASPs) and imposing new compliance requirements on these entities. Meanwhile, the Argentine securities regulator announced the allowance of foreign investment products related to various crypto ETF opportunities to enter the market. President Milei plans to implement a policy of free currency circulation by 2025, allowing Argentinians to choose any currency, including Bitcoin, for trading, providing new opportunities for economic diversification.
Brazil has established friendly regulations with significant potential to develop RWA (Real World Assets), a diverse and vibrant community, and is piloting a CBDC (referred to as DREX).
In El Salvador, Bitcoin is legal tender, and the government encourages its adoption while promoting cryptocurrency tourism. On December 11, El Salvador signed an agreement with Argentine regulators to support the development of the cryptocurrency industry in both countries.
Conclusion:
Overall, the bull market of 2024 is undoubtedly a key year for compliance in the global cryptocurrency and blockchain industry. Despite facing certain uncertainties and challenges under the evolving regulatory framework, the overall situation is improving, and cryptocurrencies are moving towards integration into the mainstream financial system and mass adoption. Looking ahead to 2025, how to balance regulation and innovation, and strengthen coordination and communication between the industry and regulators, will be crucial for the future development of the crypto industry.
