Article reprinted from: Weilin
Author: Weilin, PANews
2024 is a special and critical year for global blockchain regulation. The regulatory framework of the cryptocurrency industry will be initially improved, and crypto assets will be integrated into the mainstream financial system.
The approval of Bitcoin and Ethereum ETFs in the United States has pushed cryptocurrencies towards mainstream adoption. At the same time, the new US government led by Trump is about to take office, and the new Securities and Exchange Commission (SEC) Chairman Paul Atkins will take office, indicating that compared with the previous SEC's "enforcement-based regulation" model, US regulators may adopt "information disclosure-based regulation" in the future. The establishment of a White House director of artificial intelligence and cryptocurrency affairs for the first time also indicates a more friendly, flexible and innovative crypto regulatory policy.
In Europe, the Stablecoin Regulation Act (Market Regulation of Crypto Assets) (MiCA) has officially come into full effect, and crypto companies are accelerating the competition for stablecoins. In Asia-Pacific, Hong Kong, China approved Bitcoin and Ethereum spot ETFs in April, and virtual asset exchanges added four new members. In terms of stablecoins, Hong Kong has launched a stablecoin sandbox and a stablecoin bill.
Elsewhere in Asia, such as Vietnam, the government has released a (National Blockchain Development Strategy). In Russia, cryptocurrency mining regulations came into effect. In addition, in the Middle East and North Africa and the Americas, the UAE, Qatar, and Argentina have also demonstrated positive policy innovations in cryptocurrency regulation.
At the end of the year, PANews takes stock of the important regulatory developments in the global crypto market. Under different regulatory systems in different regions, the crypto market will present a completely different look next year.
United States: BTC and ETH spot ETFs approved and regulatory expectations of the new government
On January 10, 2024, local time, the U.S. Securities and Exchange Commission (SEC) approved the spot Bitcoin exchange-traded fund (ETF), and then on May 23, local time, it approved the Ethereum ETF in a "180-degree" reversal. On July 23, the U.S. Ethereum spot ETF was officially traded. The two events marked an important milestone in the U.S. crypto investment field. Bitcoin ETF and Ethereum ETF provide a scalable bridge between traditional finance and cryptocurrencies, becoming a key integration point.
According to SoSoValue data, as of December 23rd local time, the total net asset value of the US Bitcoin spot ETF was US$105.08 billion, accounting for 5.7% of the Bitcoin market value. The total net asset value of the US Ethereum spot ETF was US$12.05 billion, accounting for 2.94% of the Ethereum market value. The successful start of the approval of the 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.
Two important bills on crypto regulation in the United States are also worth noting this year. On May 22, 2024, the U.S. House of Representatives approved the 21st Century Financial Innovation and Technology Act (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. It is still under progress.
On June 1, US President Biden vetoed another regulation, SAB 121, which aims to overturn the accounting standards announced for companies that custody cryptocurrencies. This may also change in the new year with the coming of a new government, making it easier for more large companies to adopt cryptocurrencies.
After the US election, the new government led by Trump is expected to start a new crypto regulatory model. Trump, who supports cryptocurrencies, elected several politicians who support cryptocurrencies to important positions when selecting candidates for the new government. For example, on December 5, Trump formally nominated Paul Atkins as 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, which was the first time this position was established. On December 23, 29-year-old political newcomer Bo Hines was appointed executive director of the Trump Crypto Commission. On December 13, French Hill was elected chairman of the House Financial Services Committee. This series of appointments indicates that the United States may adopt a more friendly policy in the field of crypto regulation in the future.
Europe: MiCA Act takes effect and stablecoin competition intensifies
The EU (Markets in Crypto-Assets Regulation Act) (MiCA) regulation on stablecoin issuers came into effect on June 30 and was fully implemented on December 30. MiCA is the EU's first complete regulatory framework for the crypto industry, and it specifically sets clear requirements for the regulation of stablecoins. Although some crypto companies say they are not fully prepared, competition in the European stablecoin market is bound to intensify amid increasingly stringent compliance requirements. For example, Tether, which has not obtained a license, has invested in the Dutch company Quantoz and the European stablecoin provider StablR.
In addition, the UK Financial Conduct Authority (FCA) has also expressed its hope to launch a comprehensive regulatory regime for cryptocurrencies by 2026. A study commissioned by the FCA showed that the holding of crypto assets has increased by 4% in the past two years, and about 7 million adults hold crypto assets out of the country's population of about 68 million.
On December 21, the German parliament passed the legislation needed to fully implement the crypto MiCA (Financial Market Digitalization Act).
Hong Kong: Four new VATP licensees added to promote stablecoin development
On October 31, 2022, Hong Kong officially released its virtual asset policy declaration. As of today, there are nearly 1,000 Web3 companies in Hong Kong.
At the end of April this year, Hong Kong approved six virtual currency ETFs under China Asset Management Hong Kong, Bosera International and Harvest International. Although facing fierce competition from similar overseas products and the trading volume needs to be improved, they mark Hong Kong's key position in the global crypto regulatory system.
On July 18, the Hong Kong Monetary Authority announced the first three "sandbox" participating institutions, including JD CoinChain Technology, Yuanbi Innovation Technology, and the joint applicants Standard Chartered Bank (Hong Kong) Animoca Brands Limited and Hong Kong Telecom (HKT). These three institutions can test the expected business model within the specified scope and communicate with the HKMA on how to comply with the proposed stablecoin regulatory system in the future. Hong Kong's Virtual Currency License (VATP) system has further promoted the compliance development of crypto asset service providers. On December 18, after OSL Exchange, HashKeyExchange 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 laid the foundation for comprehensive regulation of stablecoins (FRS) anchored to fiat currencies. In the future, under a legal and compliant regulatory framework, Hong Kong is likely to issue a stablecoin that can be widely used in many scenarios such as investment, trade, and payment.
Other regions in Asia Pacific: Further advancement of Web3 policies and sandbox regulation
On November 27, Japan's new digital minister Masaaki Taira announced at a forum that the country's Prime Minister Shigeru Ishiba has reorganized his party's Web3 and crypto policy-making department to further promote the country's policy innovation in the field of crypto and blockchain. The government said it has no intention of preventing the "promotion" of Web3-related businesses. The project group is the brainchild of former Prime Minister Fumio Kishida, who resigned as prime minister and leader of the Liberal Democratic Party earlier this year. Shigeru Ishiba has said that he also supports policies that support Web3. The Liberal Democratic Party of Japan (LDP) is pushing for cryptocurrency tax reforms. The proposed reforms include applying a separate tax rate of 20% to cryptocurrency trading profits and introducing a loss carry-forward system. Currently, cryptocurrency profits in Japan are classified as miscellaneous income, which can be taxed at a maximum rate of 55%.
In South Korea, on July 19, the country introduced the Virtual Asset User Protection Act, which aims to enhance investor protection and ensure the future development of the market. However, shortly after the implementation of the new regulation, the political situation in South Korea became turbulent. After martial law and impeachment plans for the current president, the South Korean National Assembly decided to suspend all regulatory discussions related to cryptocurrencies.
Meanwhile, countries such as Indonesia, Thailand and Vietnam are also strengthening regulation of the crypto market, especially by launching sandbox frameworks that allow innovative projects to experiment in a light-regulatory environment. Specifically, the Indonesian Financial Supervisory Agency (OJK) launched a sandbox framework in June 2024. In August 2024, the Thai SEC introduced a digital asset sandbox, which complements its existing detailed licensing framework. Allowing testing of key initiatives in line with emerging market trends. The Vietnamese government announced the (National Blockchain Development Strategy) through its official website on October 22, aiming to make Vietnam a leading regional blockchain technology research, application and innovation center by 2030.
India's unfriendly regulatory policies towards the crypto market are also loosening up. In January this year, Binance, Kraken and other exchange apps were blocked by the Indian Financial Intelligence Agency for not complying with India's anti-money laundering rules and were removed from the Indian Apple App Store. But in May this year, Binance and KuCoin became the first offshore crypto-related entities approved by the Indian Financial Intelligence Unit (FIU) on the condition that they paid a fine after a hearing with the FIU.
Russia: Cryptocurrency mining regulations come into effect and digital currency taxation changes
Russia's comprehensive cryptocurrency mining regulations came into effect on November 1, 2024, imposing strict energy caps, mandatory registration and regulatory requirements, bringing a clearer legal framework to the industry. The new regulations officially include cryptocurrency mining as a legal activity and set safety and operational standards for miners, while requiring digital financial asset transactions to be conducted on specific platforms. The regulations are designed to balance the growth of Russia's crypto industry, energy needs and control over illegal mining.
According to the new regulations, only registered companies and individual entrepreneurs can legally engage in crypto mining activities, while unregistered individual miners must not consume more than 6,000 kWh of electricity per month. Those who exceed this limit must register as entrepreneurs to continue mining. In addition, on November 29, Putin signed a new digital currency tax bill, which clearly regards digital currency as property, exempts it from value-added tax, and provides tax exemption for cross-border settlement. Despite this, mining service providers are still required to report user information to the tax authorities, and those who fail to report on time will face fines.
On December 4, Putin stated at the Russia Calling investment forum that the development of digital payment tools such as Bitcoin cannot be banned, emphasizing that the future of these new technologies will continue to move forward.
Middle East and North Africa: Rapid Growth of Cryptocurrency Market
In the Middle East and North Africa, the UAE's cryptocurrency ecosystem has grown rapidly, thanks to regulatory innovation, institutional interest, and the expansion of market activities. The Dubai Virtual Asset Regulatory Authority (VARA), established in 2022, provides the crypto industry with a world-leading regulatory framework and promotes its further development. Currently, 23 platforms have obtained VARA licenses, and 13 new licenses have been issued this year, including Binance, Bybit, OKX, Deribit, etc.
Saudi Arabia remains the fastest growing cryptocurrency economy in the Middle East and North Africa, with total on-chain value increasing by 154% compared to last year, according to a Chainalysis report. This rapid growth is due to the country's continued development in blockchain innovation, central bank digital currency (CBDC), gaming industry, and fintech.
Qatar is the second fastest growing cryptocurrency market in the region. The Qatari government once banned the trading of crypto assets, but the current regulatory policies are also being improved. The Qatar Financial Center (QFC) launched a new digital asset regulatory framework in September this year, including the definition of digital assets, market access and compliance requirements, technical standards and security, consumer protection and education, international cooperation and standardization. These five aspects have laid a legal and regulatory foundation for the development of digital assets.
South Africa: The friendliest among African countries, with 248 licenses issued
South Africa is one of the most cryptocurrency-friendly countries in Africa. The South African Reserve Bank (SARB) has not explicitly banned the use of cryptocurrencies.
As of December 16, 2024, the Financial Sector Conduct Authority (FSCA) of South Africa has issued 248 licenses out of 420 applications for Crypto Asset Service Provider (CASP) licenses received. According to a local report, 56 applications are still under review, while 9 applications have been rejected. In addition, the report pointed out that 106 institutions withdrew their applications after the FSCA questioned the business models of some companies.
Americas: National Policy Innovation on Cryptocurrency
In the Americas, Argentina is vigorously promoting the popularity of cryptocurrencies. On October 22, the Argentine Securities Regulatory Agency (CNV) announced a public consultation on a draft bill that aims to regulate the operations of the country's virtual asset service providers (VASPs) and impose new compliance requirements on these institutions. At the same time, the Argentine Securities Regulatory Agency announced that foreign investment products related to a variety of crypto ETF opportunities will be allowed to enter the market. President Milley plans to implement a free currency circulation policy in 2025, allowing Argentines to choose any currency, including Bitcoin, to trade, providing new opportunities for economic diversification.
Brazil has established friendly regulations, has great potential to develop RWAs (real world assets), a diverse and vibrant community, and has a CBDC in the pilot phase (called DREX).
In El Salvador, Bitcoin is legal tender, the government encourages adoption, and incentivizes cryptocurrency tourism. On December 11, El Salvador signed an agreement with Argentine regulators to help the two countries develop the crypto industry.
Conclusion:
In general, the bull market in 2024 is undoubtedly a key year for the global cryptocurrency and blockchain industry in terms of compliance. Although crypto companies and practitioners still face certain uncertainties and challenges under the evolving regulatory framework, the overall situation is positive, and cryptocurrencies are moving towards the mainstream financial system and mass adoption. Looking ahead to 2025, how to balance regulation and innovation, as well as strengthening coordination and communication between the industry and regulation, will become the key to the future development of the crypto industry.
