Regulators face fresh difficulties as a result of the global cryptocurrency markets’ explosive expansion
Countries have adopted various measures to regulate the asset class as cryptocurrencies have grown in importance in global investing. Governments all around the globe are looking for methods to regulate cryptocurrencies as they develop from speculative investments to a new asset class. The regulatory environment for digital money in several nations is outlined here in brief.
In 2022, the United States unveiled a new framework allowing further regulation. Due to the new instruction, existing market authorities like the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) now have authority. With its well-publicized lawsuit against Ripple, the SEC has already taken steps to regulate the industry. The SEC claims that Ripple generated over US$1.3 billion by selling its native cryptocurrency, XRP, in unregistered securities transactions.
The SEC has recently focused on exchanges with cryptocurrency goods, including Coinbase (COIN) and Binance (BNB). Gary Gensler, the chairman of the SEC, has spoken out against cryptocurrencies and called them “a Wild West.” In the upcoming years, American officials may crack down severely on cryptocurrencies to stop the constant influx of new coins. Whether cryptocurrencies may be classified as securities depends on the result of the SEC’s lawsuit against Ripple Labs and its efforts to regulate crypto exchanges.
The new framework put out by the Biden administration also sees “significant benefits” in developing a digital version of the dollar or a central bank digital currency (CBDC).
According to Federal Reserve Chairman Jerome Powell, issuing a CBDC would aim to eliminate the nation’s need to utilize alternate coins.
In testimony before Congress, Powell stated that the existence of a digital US currency would eliminate the need for stablecoins and cryptocurrencies. That is one of the most compelling reasons in its favor.
To assess inheritances, China regards bitcoins as property. Due to their facilitation of unauthorized public funding, cryptocurrency exchanges are prohibited from functioning in China by the People’s Bank of China (PBOC). Additionally, China banned Bitcoin mining in May 2021, prompting many people involved in the practice to shut down their businesses completely or move to countries with better regulatory environments. Additionally, cryptocurrencies were explicitly outlawed in September 2021. However, the nation has been putting effort into building the electronic Chinese Yuan (e-CNY). It formally launched the second phase of its Central Bank Digital Currency (CBDC) pilot test program in August 2022.
Although it is not regarded as legal cash in Canada, the nation has been more proactive than others in regulating cryptocurrencies. With several trading on the Toronto Stock Exchange, Canada became the first nation to authorize a Bitcoin Exchange-Traded Fund (ETF). The Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) mandate that Canadian cryptocurrency exchanges and dealers register with their respective provincial authorities. All cryptocurrency investment firms must register with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) and are categorized by Canada as Money Service Businesses (MSBs). Canadian Center for the Analysis of Financial Transactions and Reports. Money Services Companies. Canada handles cryptocurrencies similarly to other commodities in terms of taxation.
Although cryptocurrencies have existed since 2009, authorities are still figuring out how to control their usage. Businesses and consumers must be shielded against fraud, and preventative measures must be implemented to combat unauthorized crypto usage. Although it is a difficult and contentious process, many nations are progressing.
