The main goals of cryptocurrency regulations are to promote transparency, consumer and investor protection, and a level playing field for various market players. This article will cover some of the cryptocurrency regulations that have been established over the last ten months of 2022.
As cryptocurrency has grown in importance in the global investing scene, countries have taken varying methods to implement crypto regulations.
Governments have found it harder to ignore cryptocurrencies as it becomes more widely known and understood. As a result, greater attention is being paid to the legal and regulatory challenges that it raises. The topic continues to dominate the news and is a frequent topic of conversation for investors, regulators, politicians, and legal experts. This is due to ongoing changes in the underlying operating systems that power various cryptocurrencies as well as how widely accepted they are as a form of payment and exchange.
Most recent Bitcoin and cryptocurrency regulations in 2022
Governments all across the world are looking into methods to regulate cryptocurrencies as they develop from speculative investments to new assets. Some of the most recent cryptocurrency regulations in 2022 are given below.
- Japan’s regulatory framework for stablecoins
- Monetary Authority of Singapore guidelines on DPT
- EU Markets in Crypto-Assets (MiCA) regulation
- UK Financial Services and Markets Bill (FSMB)
- US cryptocurrency regulation bill
Japan’s regulatory framework for stablecoins
The “Amendment Act” (also known as the “Bill for Partial Amendment to the Act on Payment Services Act) for the Purpose of Establishing a Stable and Efficient Funds Settlement System was introduced to the Diet on March 4, 2022, and later adopted by the Diet on June 3, 2022. The Amendment Act intends to create a reliable and effective funds settlement system that can adapt to the digitalization of finance and other industries, in light of
- the rise in stablecoin issuance and circulation abroad,
- the expanding need for banks to strengthen their transaction monitoring, etc., and
- the rising use of prepayment instruments that allow for electronic payment.
According to Article 2, Paragraph 5 of the Amended Payment Services Act (the “Amended PSA”), the Amendment Act also introduces the concept of “electronic payment instruments,(EPIs)” which is the same as the concept of stablecoins, in connection with the increase in the issuance and circulation of stablecoins abroad.
A new definition of intermediary activities in relation to the management of stablecoins that qualify as EPIs is also included in the Amendment Act. In particular, the Amendment Act defines “electronic payment instruments transaction business” as the management of stablecoins that are EPIs in addition to establishing a registration mechanism for companies involved in such operations. The Amendment Act will take effect one year after it is promulgated. A later Cabinet Order will provide the precise date.
Monetary Authority of Singapore guidelines on DPT
The Monetary Authority of Singapore (“MAS”) published a new set of guidelines on January 17, 2022, outlining what the MAS expects of service providers of digital payment tokens (DPTs, also known as cryptocurrencies) in relation to the promotion of their DPT services to the general public in Singapore. In essence, MAS anticipates that DPT service providers in Singapore won’t advertise their DPT services to the general public.
The updated regulations will be in effect for DPT service providers that are licensed, exempt DPT service providers (such as banks and other financial institutions), and operating under the terms of the Payment Services (Exemption for Specified Period) Regulations 2019’s transitional arrangement. In actuality, the rules will apply to all organizations that are currently granted permission to offer DPT services in Singapore, whether through a license or an exemption.
The new regulations make clear what the MAS expects, which is that DPT service providers refrain from marketing or publicizing their DPT services:
- in Singapore’s public spaces, such as through signage at public transportation hubs, public websites, public social media platforms, broadcast and print media, or the availability of actual ATMs;
- by using third parties, such as social media influencers, to advertise DPT services to Singaporeans in general.
- Only the official social media profiles, corporate websites, or mobile applications of DPT service providers may be used for marketing or advertising.
Markets in Crypto-Assets (MiCA) regulation
With the European Council’s approval of the thorough Markets in Crypto-Assets (MiCA) law on October 5, the European Union (EU) has made significant progress in the regulation of cryptocurrencies.
With the Markets in Crypto-Assets bill, the European Securities and Markets Authority (ESMA) and the European Banking Authority will have full regulatory authority over this asset class (EBA).
MiCA will deal with crypto-assets including e-money tokens, utility tokens, and asset-referenced tokens that are not currently covered by existing laws.
The MiCA will create a legislative framework that will include both consumer protection and providers of crypto-asset services. A notable example of a crypto-asset service is the custody and management of crypto-assets on behalf of third parties.
Without the requirement of national implementation laws, MiCA will be applied uniformly across the European Union (EU). This strategy ensures efficient and standardized access to innovative crypto-asset markets across a single market while also maintaining consumer safety.
The four primary goals of the markets in crypto-assets regulation are as follows:
- Providing a solid legal foundation for the crypto assets within its purview that are not covered by the current financial services legislation, so ensuring legal certainty;
- Fostering innovation and competitiveness to encourage the growth of crypto-assets by establishing a secure and reasonable environment;
- safeguarding customers, investors, and market integrity in light of the dangers posed by crypto assets; and
- Securing financial stability while incorporating measures to deal with possible threats to such stability.
The Markets in Crypto-Assets regulation was supposed to go into effect by the middle of 2023. However, it is likely to be postponed until 2024 because an 18-month window is planned to allow level 2 measures to be implemented before MiCA is put into effect.
UK Financial Services and Markets Bill (FSMB)
For the first time, provisions for the regulation of crypto assets and stablecoins were incorporated in the UK Financial Services and Markets Bill (FSMB). The legislation calls for stablecoin issuers that accept payments to obtain a license from the Financial Conduct Authority (FCA). This bill goes beyond the anti-money laundering regulations that some cryptocurrency businesses already have to follow.
The passage of this Bill might mark the beginning of a comprehensive regulatory framework for cryptocurrencies and grant the FCA much broader authority, which would ultimately benefit consumers by providing them with more security and protection.
The public’s awareness, acceptability, and confidence regarding the usage of cryptocurrencies as assets and, consequently, as a method of carrying out daily transactions comparable to those seen in other nations, may be further increased by such security.
US crypto regulation bill
The Executive Order on Ensuring Responsible Development of Digital Assets, signed by US President Joe Biden in March, mandates that the US government do a study and analysis on cryptocurrencies.
The much-anticipated Responsible Financial Innovation Act was introduced on June 7 by U.S. Senators Cynthia Lummis and Kirsten Gillibrand, offering a comprehensive set of crypto regulations that address some of the most pressing issues affecting the digital asset industry. The crypto regulation bill presents a bipartisan response to President Biden’s demand for a whole-of-government approach to regulating crypto by offering comprehensive direction to the quickly expanding industry.
The administration has shown how cryptocurrencies would operate in the nation without drafting any new laws. The regulations include sections on how firms, investors, and consumers will be safeguarded and given access to secure financial services. The goals of cryptocurrencies are to combat criminal finance, support financial stability, offer responsible innovation to strengthen the current financial leadership, and investigate the potential for central bank digital currency (CBDC)
As a result of the regulations, enforcing agencies are now able to evaluate and compare customer complaints. The government has charged the Securities and Exchange Commission and Commodity Futures Trading Commission with securing these assurances.
The crypto regulation bill establishes fundamental definitions, grants an exemption for transactions involving digital currencies, aligns the responsibilities of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), draws regulatory boundaries, and gives the CFTC sizable increase in jurisdiction.
Although some aspects of DAO policy are helpfully clarified by the legislation, more action is needed to address any unresolved issues with legal standing, related laws, and jurisdictional authority.
Despite the skeptics, it is obvious that cryptocurrencies will be around for a very long time. The endurance of crypto as a technology means that cryptocurrencies will continue to have a solid presence in most of the economies of the globe, despite any market changes that may occur in the upcoming years.
The majority of governments attempt to control how these digital assets are used. We anticipate the implementation of numerous additional restrictions in 2023, covering non-fungible tokens in addition to cryptocurrencies (NFTs).