Crypto regulation in 2024: 5 key updates you need to know

Cryptocurrencies are not as new as they were a few years ago, but they certainly maintain the atmosphere of a new and complex concept for regulators worldwide. Therefore, laws and rules surrounding these assets are still a work in progress everywhere, with some already in place, others yet to come, and some more evolving along the way.

Year to date, various jurisdictions have put their two cents on the matter, changing the rules for many crypto users and companies in their areas. It is always important to stay abreast of these developments as they can directly affect us and our crypto funds. Let’s then find some remarkable regulatory updates for the crypto industry worldwide in 2024 – so far.

Stablecoins and MiCA

The regulatory framework for markets in crypto-assets (MiCA) is not exactly new, as it was proposed in 2020 and approved in 2023 for all members of the European Union. However, this year is fundamental to its life cycle, being the implementation phase and the entry into force from December 2024.

This regulation serves as a comprehensive guide for crypto-asset service providers (CASPs) in the EU, with the aim of striking a balance between encouraging innovation and protecting investors. Licensed financial entities must inform their national authorities of their crypto activities, while unlicensed entities face a strict authorization process. MiCA also ensures that CASPs manage customer complaints effectively by requiring clear, accessible and annually reviewed procedures, adequate resources and skilled staff to deal with issues quickly and fairly.

Needless to say, CASPs – by definition – are centralized entities, even if they work with decentralized cryptocurrencies or crypto-platforms.

A critical point of the law naturally involves stablecoins and has caused concern among major providers – namely Tether (USDT) and USD Coin (USDC). **Under MiCA, stablecoin issuers not linked to European currencies must stop issuing if daily transactions exceed €200 million, to prevent private entities from encroaching on the euro’s role. Both USDT and USDC, for example, widely exceed that daily limit. \ Moreover, even though they are linked to European currencies, they must meet strict requirements and obtain a proper license to operate. As of June 2024, only Circle (issuer of USDC) has obtained an Electronic Money Institution (EMI) license to continue operating in the EU, while Tether Limited has not even tried.

As a result, several crypto exchanges have started to delist this asset for their EU customers, while Tether expects them to use it as a transactional gateway and does not allow direct exchanges with fiat. The specific MiCA rules for stablecoins came into effect on June 30, 2024.

Against a USD CBDC and supervision

Central Bank digital currencies (CBDCs) can be a touchy subject for many people. Some of them (not even all) are technically cryptocurrencies in the sense that they are built with Distributed Ledger Technology (DLT) and are available for transactions worldwide. However, these are also coins that are completely controlled by governments, and concerns about surveillance and censorship surrounding them have arisen more than once.

According to the Atlantic Council, 134 countries and currency unions, representing 98% of global GDP, are exploring a CBDC, but most of them are in research or pilot phases, and only three have successfully launched one by May 2024. The other 17 are inactive, and at least two projects have been cancelled. The United States joined as the third canceled project this year because the House of Representatives passed a bill prohibiting the Federal Reserve from issuing a USD CBDC. This would make the United States the first country to completely ban its own (potential) CBDC due to surveillance concerns.

In the same line against surveillance, the crypto project Worldcoin has caused some fears around the world. Created by OpenAI founder Sam Altman, this venture aims to create a unique digital identity by scanning people’s irises in exchange for a digital ID and some coins, presumably to address online identity verification in ‘ a world increasingly plagued by scams and AI impersonation. However, privacy experts are concerned about the collection and protection of biometric data, fearing misuse or unauthorized access.

There have been reports of deceptive practices and data breaches, raising further questions about the project’s security and ethical implications. This is why it has been questioned by regulators of more than ten countries, and outright banned in Kenya, Portugal, Spain, Hong Kong and probably Italy.

FIT21 and self-preservation in the US

In addition to banning CBDC, regulators in the US have been very busy this year. Probably one of the biggest developments around cryptocurrencies was the Financial Innovation and Technology for the 21st Century Act (FIT21). This bill establishes a clearer regulatory framework for digital assets and gives the Commodity Futures Trading Commission (CFTC) authority over decentralized digital assets and the Securities and Exchange Commission (SEC) authority over centralized ones.

In other words, the CFTC will handle digital commodities (mostly cryptos), while the SEC will only oversee those considered securities. New and clear definitions will be put in place so that every player in the industry can know whose rules will be followed. FIT21 was approved by the House of Representatives in May. The next steps for the bill to become law include passage in the Senate, where it will be examined further, and then it must be signed by the President. The Biden administration has expressed opposition to the bill but has not threatened to veto it.

On the other hand, serious concerns about self-preservation wallets were enough for several providers to leave the country and its citizens. Acinq, Phoenix and Wasabi pulled out of the US, while the Department of Justice (DOJ) accused Samourai Wallet founders of money laundering because of that software – just as they previously accused Tornado Cash founders. Probably as a response to that, the states of Oklahoma and Louisiana passed their own bills to protect crypto self-preservation rights in their jurisdictions.

AML/KYC and new licenses

Back in 2021, as evidenced by a crypto regulatory report, most countries worldwide have already implemented AML/KYC rules and procedures for cryptocurrency exchanges. The number has only increased over the years, and sometimes new related regulations have been added to the first ones. It can be demarcated to properly identify customers for all crypto businesses, and crypto users are required to share their identity and documents when trading against fiat currencies.

Additionally, stricter requirements and licenses for cryptocurrency service providers have appeared. This is the case in Türkiye, where their Parliament approved the Capital Markets Law Amendment Bill in June 2024. This framework now mandates that crypto asset service providers obtain permission from the Capital Markets Council (CMC) for establishment and operation, with technological criteria set by TÜBITAK (Turkey’s Scientific and Technological Research Council). It introduces definitions for crypto-assets and service providers, requires independent financial audits, and imposes severe penalties for unlicensed operations.

Other countries, in turn, have posted or adjusted their own AML regulations for cryptocurrencies this year. Among them we can count Singapore, Argentina, Kenya, Taiwan, India, Costa Rica and even the European Union. In the latter case, they aim for stricter measures, where cryptoasset service providers will have to apply the same AML rules as banks for transactions over €1,000. At least they expressly do not impose these rules on self-storage wallet providers.

Crypto bans come and go

As of September 2023, according to the Atlantic Council, there were at least 9 countries with a blanket ban on cryptocurrencies. One of them was Bolivia, and there is actually good news about it. In June 2024, the Central Bank of Bolivia (BCB) lifted its 4-year ban on cryptocurrency transactions, allowing financial entities to engage with crypto under new regulations.

This decision, taken in collaboration with the Financial System Supervisory Authority (ASFI) and the Financial Investigation Unit (UIF), follows the recommendation of the Latin American Financial Action Task Force (GAFILAT) to regulate Virtual Asset Service Providers in the country. The BCB aims to modernize the country’s payment system, improve financial infrastructure and promote digital financial inclusion.

On the opposite side, the Central Bank of the United Arab Emirates (UAE) discussed issuing regulations for payment proof services aimed at licensing stablecoins, requiring such tokens to be backed by UAE dirhams and not pegged to other currencies not. For crypto-lawyer Irina Heaver, this could imply a practical ban on crypto-payments within the country. However, the results of this discussion and subsequent commentary remain to be seen.

Obyte as a safe place

We can say that Obyte, built on a Directed Acyclic Graph (DAG) system, positions itself as a robust platform resistant to surveillance, seizure of funds and censorship attempts. Unlike blockchain structures, Obyte’s minerless DAG architecture allows for fully decentralized data storage and transaction validation, making it inherently resistant to centralized control.

This setup ensures that no single entity can reject, seize, or censor transactions, preserving user autonomy and providing privacy features. The platform’s focus on user control is further strengthened by the use of human-readable smart contracts that execute autonomously without the need for intermediaries or encryption, reducing vulnerabilities to censorship attempts.

By leveraging its DAG technology, Obyte enhances decentralization and autonomy, making it a potentially safer ecosystem for users concerned about privacy and security. This combination of features positions the ecosystem as a promising solution for those seeking a crypto platform that prioritizes user control and resilience against external interference.

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