Last May [2023] in a paper titled ‘Pathways to the Regulation of Crypto-Assets: A Global Approach’, the World Economic Forum (WEF) pointed to the need for countries to harmonize their regulatory frameworks for cryptocurrencies despite the challenges that is involved.
“As with some other emerging technologies, this ecosystem regulates [crypto-assets] is like walking a tightrope – it requires a delicate balance between preventing harm, protecting users and promoting innovation,” says Arushi Goel who wrote the paper.
Since then, the WEF has updated its findings and kept track of how different countries and economic regions have addressed the challenges of introducing crypto-regimes.s.
Challenges for a Global Approach to Cryptoregulation
Different jurisdictions do not have universally agreed tax systems, classifications and definitions for crypto-asset markets. Participants in crypto trading are often hampered by misunderstandings and have a poor understanding of financial risks.
Arbitrage is the practice of buying crypto from one entity and selling it to another almost instantly. The idea is to take advantage of marginal price variations between different jurisdictions that have non-synchronized and independently evolving financial frameworks. This is of course a headache for regulatory authorities in those different jurisdictions who have to apply different tax codes and legislative guidelines to such transactions. This further inhibits the development of holistic oversight throughout the crypto ecosystem.
Inadequate coordination among various law enforcement agencies hinders the policing, monitoring, and oversight of the crypto industry, impeding the establishment of coherent and consistent regulatory frameworks.
Some countries and/or regions have attempted to meet the challenges of establishing regulatory frameworks for crypto-assets with varying degrees of success.
The WEF has noted the following updates in countries or regions since its white paper was published:
Crypto regulation updates in the US
Although the WEF noted progress in US crypto regulation currently stuckthe following has been achieved:
Crypto regulation updates in the EU
The EU started with the introduction of the Markets in Regulation of Crypto Assets (MiCA) in June 2023, and is the first economic region or country to develop and implement a comprehensive framework for the regulation of cryptocurrencies.
The EU’s supervisory and regulatory body, the European Securities and Markets Authority (ESMA), has closed a three-month public consultation period on aspects of MiCA implementation at the end of April 2024.
The EU expects to fully integrates MiCA in the economic region’s crypto regulatory framework in December 2024, and from January 2026 all crypto trading service providers must verify and disclose the identities of all originating senders and destination beneficiaries, regardless of the amounts traded.
Crypto regulation updates in the UK
The Financial Conduct Authority, with whom entities wishing to trade in cryptocurrencies must be registered, and the Bank of England (BoE) have both took fixed positions on the regulation of stablecoins.
The BoE believes this regulation will increase convenience for UK consumers while preventing financial crime.
For another perspective on how the US, EU and UK are approaching crypto regulation, click here.
Crypto regulation updates in Asia
Asian countries’ approaches to crypto regulation are many and varied. Some examples are:
Japan recognizes crypto as legal tender, and recent new identification rules for transactions on exchanges aim to combat money laundering.
See also
India did not ban crypto trading in 2020, but progress since then has stalled. The Cryptocurrency and Regulation of Official Digital Currency Bill is promising.
China currently has a outright ban on cryptocurrencies.
Crypto regulation updates in South America
Meanwhile, in South America, Brazil took steps towards crypto regulation in June 2023.
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