Cryptocurrency Regulations from a Worldwide Perspective

As the year progresses, it's evident that 2024 is set to delve deeper into blockchain regulation, with a particular focus on stablecoins, an expanded review of DeFi, and the growing interplay between cryptocurrency and artificial intelligence.

It's clear that regulators across the globe will be the driving force behind these initiatives. They will create new regulations and standards that are bound to have significant implications for the cryptocurrency landscape.

Major global entities are actively crafting cryptocurrency and Bitcoin regulations tailored to their respective markets.

Crypto Regulations Around the World

To truly understand how cryptocurrency frameworks affect both consumers and businesses internationally, it's crucial to grasp the workings of crypto regulations worldwide.

The U.S.

In the U.S., a comprehensive framework has been put into place, with several agencies overseeing the sector. The IRS categorizes cryptocurrencies as property for taxation. As a result, individuals selling or trading their crypto assets may face capital gains tax. Additionally, activities that generate earnings, such as mining or staking, are treated as taxable income.

The Financial Crimes Enforcement Network (FinCEN) upholds existing financial crime laws to shield the sector from the threats posed by money laundering and terrorism financing. Consequently, gatekeepers are expected to comply with the Bank Secrecy Act, requiring that any transactions in fiat currency exceeding $10,000 be reported, alongside thorough client due diligence measures.

The SEC is tasked with regulating cyber-related assets. While it does not classify Bitcoin or Ethereum as securities, it does oversee Bitcoin exchange-traded funds (ETFs) and regulates cryptocurrency exchanges like Coinbase.

Nonetheless, this regulatory strategy hasn't come without challenges, exemplified by the high-profile legal battle between the SEC and Ripple, which might eventually tilt in favor of the cryptocurrency company, particularly given the SEC's reluctance to appeal the latest ruling. The UK government is continuously developing new frameworks for cryptocurrency regulation. Notably, any venture dealing in digital currencies must obtain approval from the UK's Financial Conduct Authority (FCA), an agency that has prohibited trading BTC futures and options in the retail market.

The UK

As per the finance ministry's directives, all firms that engage directly with retail customers in the UK must acquire appropriate authorization for crypto trading, regardless of their geographical base.

Towards the close of 2023, the FCA introduced a travel rule governing cryptocurrency transactions. This mandates that exchanges gather additional information regarding wallet transfers, ensuring that all parties involved are thoroughly identified. There were discussions about regulating crypto assets utilized in gaming, but the UK parliament ultimately dismissed this proposal.

The European Union is also actively pursuing effective regulations for cryptocurrency. Swedish Finance Minister and EU President Elisabeth Svantesson emphasized that the FTX crash highlighted the urgent need for regulations designed to protect investors in these assets while preventing the misuse of cryptocurrencies for illicit activities like money laundering and terrorist financing.

EU

The European Union's objective is to establish consistent regulatory protocols for cryptocurrency and Bitcoin across all member states. Cryptocurrency assets are specifically addressed in the latest Anti-Money Laundering Directives, which require parties involved in questionable activities to report to their national financial intelligence units.

Additionally, exchanges must maintain records of their accounts and report transactions exceeding €10,000. One significant regulation currently in the works is MiCA, or the Markets in Crypto-Assets Regulation, which encompasses a wide range of cryptocurrency service providers, including exchanges, wallets, and DeFi platforms.

To effectively enhance new cryptocurrency regulations, we ought to foster innovation and advance understanding in the realm of digital assets, aiming to bring cryptocurrencies under regulatory oversight.

Key Recommendations

Licensing: Virtual Asset Service Providers (VASPs) are required to obtain licenses or register and adhere to requisite AML/CFT regulations.

Here are some general suggestions:

• Customer Due Diligence (CDD): It’s vital for governments to ensure that VASPs implement CDD measures, which involve verifying customer identities and monitoring transactions for any unusual patterns.
• Record Keeping and Reporting: VASPs must meticulously track all transactions and alert the relevant authorities about any suspicious activities.
• What is the Framework for Global Crypto Regulation?

When it comes to regulating digital currencies and cryptocurrency, particularly Bitcoin, the IOSCO has proposed 18 recommendations.

Considering that crypto assets are traded globally, which puts investors at a significant risk, the organization advocates for more coherent regulation and oversight of the sector.

Looking ahead, the World Economic Forum has pointed out that a global regulatory framework may be essential for successfully managing this unregulated market, stating that unified global regulations for cryptocurrency are not just beneficial, but imperative.

Please remember that the information on this page is not intended to serve as legal, tax, investment, or financial advice of any kind. It is advisable to invest only what you can afford to lose and to seek independent financial counsel if you have any questions. For more detailed information, we encourage you to review the terms and conditions and assistance pages provided by the issuer or advertiser. MetaversePost is dedicated to delivering accurate and impartial reporting, but market conditions can change without prior notice.