Main Changes in Crypto Regulation
This blog post will cover:
- The USA
- The European Union
- El Salvador
- What can we expect in 2023?
2022 showed that crypto regulation done right is necessary for mass adoption without suffocating technological growth. We will probably see governments worldwide and crypto actors trying to strike the right balance in the near future.
In this article, we are going to find out what were the most significant changes in the regulation of a few countries of the last year.
In 2022, the US saw important updates in crypto regulation. In March, an Executive Order was issued which called for various regulators to work in unity; the same document admitted the importance of digital currencies. After that, in July, the Department of the Treasury published a framework connected to digital currencies. The emphasis was on customers’ protection and the international entities that the US is a part of (like G7, the World Bank, and others). These two documents can be seen as the preparation steps for actual regulation which is expected in the future.
In the meantime, various groups of senators and representatives are preparing bills with different visions of crypto regulations - from taxes on mining and staking to a ban on algorithmic stablecoins for 2 years. What is more, a separate group of lawmakers suggests reporting on those miners who use over 5 megawatts of electricity. The FTX scandal made it harder for crypto enthusiasts to push their ideas further, but we will have to wait to see which of the legislation ideas become reality.
The European Union
Europe has the most significant progress when it comes to the regulation of crypto as of now. The Markets in Crypto-Assets bill which has gone through almost all stages of becoming law except for the Parliament’s approval will likely come into force in 2024. The document is comprehensive and includes regulation of such aspects as crime prevention, environmental impact, legal requirements for crypto companies, etc.
The general emphasis of the bill is on consumer protection and making sure the Union’s legislation is up to date.
South American nations are quite enthusiastic about crypto, as seen with the examples of Argentina and Brazil, but perhaps El Salvador has been on the news most in this regard lately. All because of the country’s leader, President Nayib Bukele’s controversial Bitcoin policy. For example, he announced on November 17, 2022, that the country would buy one BTC a day. A year before that, El Salvador accepted the coin as a legal tender (the first in the world) and required all businesses to accept it as a payment method.
Additionally, a bill was prepared that aimed at further regulation of digital currencies in the South American state. It would allow issuing of loans backed by BTC.
In the last few years, we saw a tightening of crypto regulation in Asia. China with its complete ban on crypto transactions, of course, took the cake. However, last year showed some signs of softening the restrictions.
First of all, the dual status of Hong Kong allows it to still deal with digital currencies fully (the city even plans to become a crypto hub again).
Secondly, in May 2022, the Shanghai court decided that Bitcoin was subject to property rights and ruled in favor of compensation of the lost value for the plaintiff.
What is more, the digital yuan is still a popular currency backed by the Central Bank of the country. All of these factors probably mean that we can expect further changes in favor of crypto from China soon.
What can we expect in 2023?
Crypto World was shaken a lot last year - from the extremely low prices for Bitcoin to huge scandals like the FTX drama. This not only made the voices of the skeptics louder but also convinced people of the necessity of regulations. This means that different countries will show their desire to agree on the terms because the regulation should be consistent across the globe to work properly.
With that, we already see some states (for example, in South America) enthusiastically welcoming crypto and trying to enhance it with the regulation, while others (like in Asia) tightening control. In the end, they will likely find a common ground, though it will require some time, given that even within the countries, there are different (often contradictory) visions. Now, however different the regulation might look, we can still see the shared values: protecting customers’ assets and support of sustainable growth.