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Cryptocurrency, Featured

Global Crypto Regulations in 2023

According to a PWC report, many regulators in different countries have enacted or are about to enact regulatory schemes to deal with digital assets such as cryptocurrencies. Broadly, these regulations and legislations focus on four areas such as travel rule, stablecoin, crypto framework development, and licensing. These trends indicate the renewed interest of authorities in cryptos. Therefore, it will not be an exaggeration to suggest that global crypto regulations in 2023 are unprecedented. 

Major Examples of Countries Focusing on Crypto Regulations in 2023

United States of America

The US government now largely relies upon existing market regulators such as the Commodity Futures Trading Commission (CFTC), and Securities and Exchange Commission (SEC). The SEC concentrates on digital engagement practices that include gamification of trading. 

The US government, despite not having a formal or a separate crypto regulating body, nevertheless is very serious about financial crimes related to digital assets. For example, FinCEN and the Office of Foreign Assets Control (OFAC) have taken actions for violating minimum requirements for trading with cryptos. Offshore crypto trading has been a core focus of many institutions in the US.

The US dollar-backed stablecoins are generally treated as payment instruments. State-backed licensed entities issue these coins. Overall, the government categorizes crypto assets into payment instruments, commodity instruments, and security instruments. 

United Kingdom

The UK government’s attitude towards cryptocurrencies has changed considerably. It announced a detailed consultation paper that will look to bring in formal legislation for crypto activities by next year. The Financial Services and Markets Act 2023 (FSMA) will include crypto assets within the existing regulatory regime such as FSMA 2000. Both these legal provisions monitor regulated activities and restrictions on financial promotions. 

Out of all global crypto regulations in 2023, the UK’s legislations seem to be more rational and less stringent. This is because the government openly sponsors cryptocurrencies and has declared that it wants to make the UK an international hub for crypto asset technology. Moreover, the regulations may have stricter rules for exchanges, custodians that store crypto on behalf of clients, and crypto lending companies. 

The UK also ensures better legal protection for crypto investors because crypto exchanges must register with the Financial Conduct Authority (FCA). However, the ban on crypto derivative trading may remain intact next year as well.

European Union (EU)

The European Union is the first major entity in the world to introduce a detailed and tailored crypto regulation framework out of all other global crypto regulations in 2023. It is called the European Union’s Markets in Crypto Assets Regulation (MiCA). 

MiCA is based on some of the existing security rules in the EU. However, experts believe that compliance provisions are tough for companies and investors. MiCA may be helpful for companies seeking to offer crypto services within the bloc. The scope of the bloc includes custody, portfolio management, trading, and advice. Therefore, the companies trading in cryptos will need prior authorization from any of the 27 national financial regulators of the EU.

In the EU, the regulations will treat only those stablecoins as valid, which are pegged to an EU currency. Furthermore, any stablecoin having over 1 million transactions shall be outrightly prohibited. The existing EU laws that deal with tax evasion, bank capital, distributed ledger trading, money laundering, etc. may orient towards this newly proposed MiCA. 

United Arab Emirates

The United Arab Emirates is one of the most crypto-friendly countries in the world. Dubai and Abu Dhabi are the two major crypto hubs in the country. The Virtual Assets Law on the Regulation of Virtual Assets (VARA) has a lenient legal framework compared to other global crypto regulations in 2023. 

VARA has a supervisory framework to pinpoint, assess, and mitigate possible risks. It is also responsible for issuing licenses for all VASP categories such as start-ups, large corporations, local and international companies, etc. In the context of Dubai only, VARA is a living rule book for all virtual asset activities. 

Abu Dhabi has a different regulatory framework called the Abu Dhabi Global Market (ADGM). It is designed to serve Web3 organizations. The Distributed Ledger Technology (DLT) in Abu Dhabi will regulate blockchain foundations. ADGM also has a resident called Hub71+ because it encourages Web3 growth. 

Singapore

Singapore has a centralized system for regulating crypto companies. It is called Digital Payment Token (DPT) providers. Digital assets in Singapore can be used as a tool for clearing debts and as a means of payment. The service providers need to apply for the crypto license under the PSA. 

Singapore has stringent laws for crypto-related crimes to prevent money laundering and illicit trade. The Monetary Authority of Singapore also called MAS has issued consultation documents for investor protection measures. 

Positive Impact of Global Crypto Regulations in 2023

Global crypto regulations in 2023 are quite unprecedented because many countries are now increasingly focusing on regulating it. Most Governments, international bodies, and financial institutions openly do not oppose cryptos anymore and have become more conciliatory. This is why there is a possibility of a far-reaching positive impact because of these regulations. 

Make Cryptos More Legitimate

The legal legitimacy of cryptos will undoubtedly increase once these regulations and legislations become standard laws.

Reduce The Possibility of Crypto Scams

The proposed standard legal frameworks, legislations, and regulations of these countries can perhaps reduce the possibility of crypto scams.

Improves ICO, IEO, and IPO quality

The regulations may benefit a large number of potential crypto investors by improving the quality of token issuance and offerings.

Also Read- World’s Biggest Crypto Bitcoin’s Impressive Performance in 2023

Bottom Line

The global crypto regulations in 2023 may prove to be crucial for the future of cryptocurrencies. The present trends indicate that most authorities are taking a conciliatory approach towards cryptos. Though different countries have proposed dissimilar crypto regulations and laws, their common objectives are more or less the same. Furthermore, the possible benefits of these legislations and regulations may considerably outweigh the disadvantages.

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