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2024 is a particularly crucial year for global blockchain regulation, as the regulatory framework for the cryptocurrency industry is being preliminarily established, and cryptocurrency assets are merging into the mainstream financial system.
In the United States, Bitcoin and Ethereum ETFs have been approved, pushing cryptocurrency towards mainstream acceptance. At the same time, the new government led by Trump is about to take office, with the new SEC Chairman Paul Atkins set to assume office, indicating that US regulators may adopt an 'information disclosure-based regulation' approach, in contrast to the previous SEC model of 'enforcement-based regulation'. The establishment of a White House Director for Artificial Intelligence and Cryptocurrency Affairs also indicates a more friendly, flexible, and innovative cryptocurrency regulatory policy.
In Europe, the Stablecoin Regulatory Act (MiCA) has officially come into full effect, accelerating competition among crypto companies in the stablecoin space. 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 terms of stablecoins, Hong Kong has launched a stablecoin sandbox and stablecoin bill.
In other parts of Asia, such as Vietnam, the government has released its National Blockchain Development Strategy. In Russia, cryptocurrency mining regulations are in effect. Additionally, in the Middle East and North Africa and the Americas, the UAE, Qatar, and Argentina have also demonstrated proactive policy innovations in cryptocurrency regulation.
As the year comes to a close, PANews reviews the significant regulatory developments in the global cryptocurrency market, indicating that under different regulatory systems worldwide, the cryptocurrency market will present a markedly different appearance next year.
United States: Approval of Bitcoin and Ethereum spot ETFs and expectations for new government regulation.
On January 10, 2024, local time, the US Securities and Exchange Commission (SEC) approved the spot Bitcoin exchange-traded fund (ETF), and subsequently, on May 23 local time, it '180-degree' reversed its decision and approved the Ethereum ETF. On July 23, the US Ethereum spot ETF officially began trading. These two events symbolize an important milestone for the US cryptocurrency investment industry. The Bitcoin ETF and Ethereum ETF provide a functional bridge between traditional finance and cryptocurrencies, becoming a key integration point.
According to SoSoValue data, as of December 23 local time, the total net asset value of Bitcoin spot ETFs in the US is $105.08 billion, accounting for 5.7% of Bitcoin's market capitalization. The total net asset value of Ethereum spot ETFs in the US is $12.05 billion, accounting for 2.94% of Ethereum's market capitalization. The successful launch of these two ETFs paves the way for more altcoin ETFs, such as Solana, Doge, and XRP ETFs, further promoting the maturation of the cryptocurrency asset market.
Two important bills in the US cryptocurrency regulation worth noting this year. 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. This bill is still under progress.
Regarding another regulation, SAB 121, on June 1, President Biden vetoed the bill aimed at overturning accounting standards set for companies that manage cryptocurrencies. The new year may also bring changes with the new government coming to power, facilitating the adoption of cryptocurrencies by more large companies.
After the US elections, the new government led by Trump is expected to launch a brand new model for cryptocurrency regulation. Trump, a supporter of cryptocurrencies, selected several pro-crypto politicians for important positions in his new administration. For example, on December 5, Trump officially nominated Paul Atkins as the Chairman of the SEC. On December 6, Trump announced the appointment of David Sacks as the White House Commissioner for Artificial Intelligence 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 the Trump Cryptocurrency Committee. On December 13, French Hill was elected Chairman of the House Financial Services Committee. This series of appointments indicates that the US may adopt more friendly policies towards the cryptocurrency regulation industry in the future.
Europe: The effectiveness of the MiCA bill and intensified competition in stablecoins.
The European Union's (MiCA) regulatory rules for stablecoin issuers came into effect on June 30 and will be fully implemented on December 30. MiCA is the EU's first comprehensive regulatory framework for the cryptocurrency industry, particularly making clear requirements for the regulation of stablecoins. Although some crypto companies have stated they are not fully prepared, the increasingly strict compliance requirements are expected to intensify competition in the European stablecoin market. For example, the unlicensed Tether has already invested in the Dutch company Quantoz and the European stablecoin provider StablR.
In addition, the UK's Financial Conduct Authority (FCA) has also expressed hopes to launch a comprehensive cryptocurrency regulation system by 2026. A study commissioned by the FCA showed that the holdings of cryptocurrency assets have grown by 4% over the past two years, with approximately 7 million adults holding cryptocurrency assets out of a population of around 68 million.
On December 21, the German Parliament passed the Financial Market Digitalization Act, which is necessary for the comprehensive implementation of cryptocurrency MiCA.
Hong Kong: Four new VATP license holders added, promoting the development of stablecoins.
On October 31, 2022, Hong Kong officially released its virtual asset policy declaration, and to date, nearly 1,000 Web3 companies have been established in Hong Kong.
At the end of April this year, Hong Kong approved the trading of six virtual currency ETFs from Huaxia Hong Kong, Bosera International, and Harvest International. Although facing fierce competition from overseas similar products, and with trading volumes yet to improve, they symbolize Hong Kong's key position in the global cryptocurrency regulatory system.
On July 18, the Hong Kong Monetary Authority announced the first batch of three 'sandbox' participating institutions, including JD Coin Chain Technology, Round Coin Innovation Technology, and a joint application by Standard Chartered Bank (Hong Kong) and Animoca Brands Limited, as well as HKT. These three institutions can test their expected business models within a designated scope and communicate with the Monetary Authority about how to comply with the proposed stablecoin regulatory system in the future. Hong Kong's Virtual Asset Trading Platform (VATP) system further promotes the compliant development of cryptocurrency asset service providers. On December 18, following OSL Exchange, HashKey Exchange, and HKVAX, Hong Kong VATP welcomed four new members, 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 stablecoin bill. This long-awaited legislative initiative lays the foundation for comprehensive regulation of fiat-backed stablecoins (FRS). In the future, under a legal and compliant regulatory framework, it is highly likely that Hong Kong will issue a stablecoin that can be widely used in various scenarios such as investment, trade, and payment.
Other regions in the Asia-Pacific: Further progress in Web3 policies and sandbox regulations.
On November 27, Japan's new Digital Minister Masaaki Taira announced at a forum that Prime Minister Shigeru Ishiba had reorganized the Web3 and cryptocurrency policy-making department of his political party, further promoting Japan's policy innovation in the cryptocurrency and blockchain industry. The government has stated that it does not intend to hinder the 'promotion' of Web3-related businesses. This project team was an idea of former Prime Minister Fumio Kishida, who resigned from both his position as Prime Minister and as head of the Liberal Democratic Party earlier this year. Shigeru Ishiba has also expressed his support for Web3-related policies. The 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 cryptocurrency 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 the Virtual Asset User Protection Act, aimed at enhancing investor protection and ensuring future market development. However, shortly after the new regulation was implemented, political turmoil emerged in South Korea, and following martial law 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 their regulation of the cryptocurrency market, particularly by introducing sandbox frameworks that allow innovative projects to experiment in a loosely regulated environment. Specifically, Indonesia's Financial Services Authority (OJK) launched its sandbox framework in June 2024. In August 2024, Thailand's SEC introduced a digital asset sandbox, complementing its existing detailed licensing framework. This allows for testing of key measures that align with emerging market trends. On October 22, the Vietnamese government announced its National Blockchain Development Strategy on its official website, aiming to make Vietnam a leading regional center for blockchain technology research, application, and innovation by 2030.
India's unfriendly regulatory policies towards the cryptocurrency market are showing signs of easing. In January of this year, exchange apps like Binance and Kraken were ordered by India's Financial Intelligence Unit to be blocked and removed from the Indian Apple App Store for non-compliance with India's anti-money laundering regulations. However, in May of this year, Binance, along with KuCoin, became the first offshore cryptocurrency-related entities approved by India's Financial Intelligence Unit (FIU), contingent upon paying a fine after a hearing with the FIU.
Russia: Cryptocurrency mining regulations come into effect and adjustments to digital currency taxation.
On November 1, 2024, Russia implemented comprehensive cryptocurrency mining regulations, establishing strict energy limits, mandatory registration, and regulatory requirements, bringing clearer legal frameworks to the industry. The new regulations formally incorporate cryptocurrency mining as a legal activity and set safety and operational standards for miners, while requiring digital financial asset transactions to occur on specific platforms. The regulation aims to balance the growth of Russia's cryptocurrency industry, energy demands, and control over illegal mining.
According to new regulations, only registered companies and individual entrepreneurs can legally engage in cryptocurrency mining activities, while unregistered individual miners are limited to a monthly electricity consumption of no more than 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, explicitly treating digital currency as property, exempting it from value-added tax, and providing tax exemptions for cross-border settlements. Nevertheless, mining service providers are still required to report user information to tax authorities, and those who fail to report on time will face penalties.
On December 4, Putin stated at the Russia Calling Investment Forum that it is impossible to ban the development of digital payment tools like Bitcoin, emphasizing that the future of these new technologies will continue to advance.
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, thanks to regulatory innovation, institutional interest, and expanded market activities. The Dubai Virtual Assets Regulatory Authority (VARA), established in 2022, provides a globally leading regulatory framework for the cryptocurrency 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 cryptocurrency economy in the Middle East and North Africa. According to a report by Chainalysis, the total on-chain value has grown by 154% compared to last year. This rapid growth can be attributed to the country's continuous development in blockchain innovation, central bank digital currency (CBDC), gaming industry, and fintech.
Following closely is Qatar, which has become the second fastest-growing cryptocurrency market in terms of on-chain value in the region. The Qatari government had previously banned trading in cryptocurrencies, but its regulatory policies are now continuously improving. The Qatar Financial Centre (QFC) launched a new digital asset regulatory framework in September this year, covering five aspects: definitions of digital assets, market access and compliance requirements, technical standards and security safeguards, 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 country among African nations, having issued 248 licenses.
Among African countries, South Africa is one of the friendliest countries towards cryptocurrencies. 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 out of 420 applications received for cryptocurrency asset service providers (CASP). According to a local report, 56 applications are still under review, while 9 applications have been rejected. Additionally, the report indicates that after the FSCA questioned the business models of some companies, 106 institutions withdrew their applications.
Americas: National Policy Innovations for Cryptocurrencies
In the Americas, Argentina is vigorously promoting the adoption of cryptocurrencies. On October 22, the Argentine Securities Regulator (CNV) announced an open consultation on a draft aimed at regulating the operations of virtual asset service providers (VASP) in the country and imposing new compliance requirements on these institutions. At the same time, the Argentine Securities Regulator announced that it would allow foreign investment products related to various cryptocurrency ETF opportunities to enter the market. President Milei plans to implement a free currency circulation policy in 2025, allowing Argentinians to choose any currency, including Bitcoin, for transactions, providing new opportunities for economic diversification. Brazil has established friendly regulations with great potential to develop RWA (Real World Assets), a diverse and vibrant community, and is piloting a CBDC (called DREX). In El Salvador, Bitcoin is legal tender, and the government encourages adoption and incentivizes cryptocurrency tourism. On December 11, El Salvador signed an agreement with Argentine regulatory authorities to support the development of the cryptocurrency industry in both countries.
Conclusion:
Overall, the bull market in 2024 is undoubtedly a key year for global cryptocurrencies and the blockchain industry in terms of compliance. Despite the ongoing evolution of regulatory frameworks, crypto companies and practitioners still face certain uncertainties and challenges. However, the overall situation is improving, and cryptocurrencies are moving towards mainstream financial systems and mass adoption. Looking ahead to 2025, how to balance regulation with innovation, and strengthen the coordination and communication between the industry and regulation, will be key for the future development of the cryptocurrency industry.
[Disclaimer] The market has risks, and investment should be done cautiously. This article does not constitute investment advice, and users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investing based on this information is at one's own risk.
This article is reproduced with permission from: (PANews)
Original author: Weilin
'Summary of 2024 Cryptocurrency Regulatory Events! Overview of 8 Regional Regulations, Will It Affect Next Year's Market Performance?' This article was first published in 'Crypto City'
