Effective regulation is seen as crucial for the mainstream adoption of cryptocurrencies. Throughout the year, crypto businesses gained greater acceptance from regulatory bodies around the world due to increased compliance. As the crypto world saw numerous operational licenses granted and expanded access across new markets, it also witnessed the collapse of companies such as Terraform Labs, Celsius, and FTX, which has been quite detrimental to the industry’s image among regulators and investors.
As we reflect on the developments of 2022 in the cryptocurrency and blockchain industries, it is important to consider the extent of the evolution of the global crypto regulatory scenario.
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Crypto Regulations Across North America
The USA has become the leader in the disruption of the crypto industry due to China’s complete ban on digital assets trading and mining that went into effect in late 2021. The largest network of crypto ATMs is located in the US, which also has the most important role in Bitcoin’s $17,250 hash rate
Among the various sub-ecosystems within cryptocurrency, NFTs or nonfungible tokens have been particularly prominent in American politics. The FEC(an acronym for Federal Election Commission) approved NFT usage for fundraising incentives, which has been viewed as a victory for cryptocurrency.
The fallout of the world’s 2nd largest exchange FTX has been viewed by many regulators as indicative of wrongdoing within the crypto industry but also helped to reduce negative attitudes towards crypto. The crypto community also received backing from Rep. Tom Emmer, who highlighted the sector’s role in pointing out SBF’s discrepancies.
Canadian Securities Administrators, a federation comprising all securities regulators within Canada, banned margin trading and leverage in crypto for investor protection, citing the FTX crash as a reason. Hydro-Québec, a Canadian energy supplier, announced plans to redirect electricity intended for cryptocurrency mining companies due to the high consumption of energy forecasted during the freezing Canadian winter.
Additionally, American legislators introduced a law for increased transparency on energy consumption patterns in crypto. Billed as the Crypto-Asset Environmental Transparency Act, the law directs the Environmental Protection Agency(EPA) to publish reports on energy consumption and crypto mining’s impact on the environment.
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South American Crypto Regulations
El Salvador has had a significant impact on the global acceptance of Bitcoin. Some have highlighted the country’s potential losses due to decreasing Bitcoin valuations. However, Nayib Bukele, the President of El Salvador, declared upcoming investment strategies, including one in which the nation would begin purchasing one Bitcoin per day on November 2022.
Economy Minister MLH Brevé also presented the government’s measure to generate a billion US dollars and venture the capital acquired towards further development of the “Bitcoin City” in November.
Brazil also began implementing a crypto-friendly policy, albeit starting late. The recently proposed bill aimed to legalize crypto as a viable means of payment in Brazil and was passed into law towards the end of last year, as former President Jair Bolsonaro was succeeded by Luiz Inacio Lula da Silva.
Brazil witnessed the implementation of a crypto-friendly policy, albeit a sluggish start. A bill that intended to legalize the use of cryptocurrencies as a means of payment within Brazil was passed into law around the end of last year, just before former President Jair Bolsonaro left office.
Digital Asset Regulations in Asia
Several Asian regulators have recently reversed their negative attitudes towards cryptocurrency and are now allowing crypto enterprises to operate within their borders. China, in particular, has relaxed its ban on cryptocurrency, while India has introduced new tax policies for crypto.
The Shanghai High People’s Court has recognized that Bitcoin has property rights, It declares that rights to the world’s first cryptocurrency can be subject to laws and related regulations. As a result, Bitcoin owners can seek compensation for unpaid loans.
India has implemented two new tax policies for digital assets, including a 30 percent tax on profits generated through crypto, and a 1% deduction on each crypto transaction. These laws have decelerated Indian crypto trade volumes, as traders are opting to stockpile their assets in anticipation of more favorable regulations. India is also planning to utilize its position as the current G20 president(valid till November 30, 2023) and develop standard procedures for crypto operations during its G20 presidency, which will last until.
Meanwhile, Pakistan’s central bank has finalized laws to accelerate the development of a central bank digital currency in response to hyperinflation concerns. In South Korea, the fallout of Terraform Labs has made regulators wary of cryptocurrency, and the KYC requirements implementation in 2021 has led to a significant decrease in hacking incidents in 2022.
MENA Region and Europe Crypto Regulations
The conflict between Russia and Ukraine served as an example of cryptocurrency’s ability to serve the unbanked population. With countless people losing access to use their savings, cryptocurrencies emerged as a way to help those affected, including through donations and as a means for Russians to bypass newly implemented currency controls.
Cryptocurrencies have been vital for both Russians and Ukrainians. Global crowdfunding raised more than $108 million for war relief in Ukraine. Crypto funds worth $54 million were raised by other organizations and utilized to procure equipment for Ukrainian fighters. The Russians on the other hand used digital assets to bypass the nation’s strict currency control protocols.
The EU’s Permanent Representative’s Committee approved the MiCA framework. An acronym for Markets in Crypto Assets, the bill is seen as the most important regulatory framework in the crypto sphere and will be valid across EU member-states.
In response to the shutdown of FTX, the UK’s HM Treasury announced guidelines and instructions for the FCA(Financial Conduct Authority) to examine and monitor crypto firms within the country, leading to upcoming legislation that will restrict foreign crypto services from continuing their operations across the UK.
The regulatory body Financial Sector Conduct Authority(FCSA) in South Africa updated its 2002 Financial Advisory and Financial Intermediary Services Act, classifying crypto and other digital assets as financial products that need to be dealt with by the financial services law.
Meanwhile, Nigeria prohibited cash withdrawals from ATMs over a certain amount per week(100,000 nairas or US$ 225) in an effort to promote its central bank digital currency usage. Also, the Dubai Virtual Assets Regulatory Authority gave the green signal to multiple crypto businesses but revoked the license of FTX MENA.
Australia has become the fourth largest hub for crypto ATMs, and its financial regulators are working on creating a regulatory framework for stablecoins. The European Union’s Committee of Permanent Representatives also approved the Markets in Crypto-Assets framework, which aims to establish consistent cryptocurrency regulations among EU member states.
The International Monetary Fund has called for increased regulation of Africa’s crypto markets, and the Central African Republic reportedly passed a bill to legalize the use of cryptocurrencies in financial markets. African crypto exchange Yellow Card received regulatory approval to expand its services across the continent.
Crypto Regulation Across Africa and Oceania
In recent times, Australia jumped over El Salvador to reach the 4th global ranking among nations with the biggest crypto ATM hubs. The top 3 nations are US, Canada, and Spain. The 6th largest country in the world has sustained its 2022 efforts toward the establishment of a stablecoin regulatory framework.
Conclusion
All over the year, the crypto community made significant progress, especially in terms of regulation, which is seen as crucial for wider adoption. Many companies in the sector focused on compliance and are laying the foundations for mainstream adoption while the world enters 2023.
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