Over the years, there has been a lot of debate within the world of cryptocurrencies, particularly surrounding the volatility levels of digital tokens. Traditional financial systems have long regarded cyber assets as too risky to ever be considered on the same level as fiat currency, stocks or bonds. However, the appeal of holding cryptocurrencies is undeniable, and even in countries that have taken measures to eliminate them, investors have found ways to add them to their portfolios.
As a result, lawmakers have begun focusing on regulations as a means to mitigate some of the risks and make investing an altogether safer endeavor. Yet, crypto users remain unconvinced and have expressed their concerns regarding the ways in which the changes will affect how to buy Bitcoin, as well as whether or not crypto will remain a censorship-resistant asset.
Here are some of the regions that have already established cryptocurrency legislation, as well as those set to enforce them shortly.
China
It should be no surprise to see China at the top of the list, considering that the nation has always been vocal about the possible risks associated with cryptocurrencies. In May 2021, China banned mining, with many operations relocating to the United States in the aftermath. Later, in September of the same year, crypto coins received an outright prohibition.
Nevertheless, China has been very open to blockchain progress, especially the ways in which they can be integrated into a regulatory framework and used within the business sector. Since August 2022, China has started working on its own crypto, based on the local fiat currency, the yuan. The country’s central bank has also commenced a testing program to see how well this coin does within a traditional financial environment.
In April 2023, the Douyin app, one of the most popular in China, with 700 million daily users, launched Bitcoin transactions, suggesting a change in attitudes. However, the ticker was removed shortly afterwards, suggesting that crypto skepticism within the administration remains high. The situation can change shortly, however, given that Hong Kong has shown a more lenient attitude towards digital assets, which might also transfer to the mainland.
United States
In 2022, the United States announced changes to the legal framework that could mean that further regulations could come over the years. Last year was particularly challenging for the cryptocurrency ecosystem, with prices plummeting and investors losing considerable portions of their digital capital. These events have caused concern among lawmakers, leading to many advising cryptocurrency users to be cautious when commencing transactions.
The new directives are set to endow existing regulators, such as the SEC and the CFTC, with the ability to intervene more promptly in issues pertaining to cryptocurrencies. These measures have affected several digital token-friendly banks since the beginning of 2023, yet the market has remained steady overall. Bitcoin has been one of the most popular assets in the world over the past few months, showing that users continue to trust the power of digital gold to create revenue.
These changes have resulted from lawmakers wanting to protect the interests of investors and offer them better protection in the case of a financial meltdown. They have also claimed that the digital asset market is not fundamentally incompatible with securities laws and should be subjected to the same regulations as a result.
The US Treasury has also commenced a crackdown in order to help uncover potentially illicit activities within the cryptocurrency market.
The UK
The British government has promised to enact more robust regulations within the following year. This comes in the context of estimations placing crypto adoption at 10% of the general public in the United Kingdom. The laws are set to be developed on existing frameworks rather than as something particular to digital assets. This shows that the moment when crypto will be considered on par with traditional holding classes might be closer than initially imagined.
The changes seek to accommodate the newer digital sector into traditional services and make room for the emerging crypto ecosystem to develop sustainably. However, legislators have also discussed the possibility that crypto companies might choose to move their processes to offshore locations due to the regulations.
The rules are meant to enhance data reporting and establish the promotional rules that can be employed, as well as ensure they are not misleading. The regulations would also provide solutions against artificial price inflation, an event in which the value of a cryptocurrency is significantly increased before it is sold, as a means of considerably improving the revenue the seller obtains.
The regulations might also provide a framework for the blockchain’s inclusion within industries on a larger scale, which can potentially transform the UK into one of the emerging hubs of cryptocurrency globally.
Japan
As a general rule, Japan has been one of the most progressive nations in the world where crypto is concerned. The country considers the gains generated from digital assets as miscellaneous income, requesting investors pay the standardized taxes associated with this revenue class in Japan. However, the country has also been steadily working on new measures concerning cryptocurrencies.
The government has announced that remittance rules will be introduced as of May 2023 to safeguard assets against the possibility of money laundering. Moreover, the Act on Prevention of Transfer of Criminal Proceeds will also be adapted to the new regulations in order to provide additional measures of customer safety protection.
As the world changes and cryptocurrencies become more commonplace, investors require additional measures that can help protect their portfolios. Governments worldwide have started creating frameworks for developing these rules, so that crypto can finally join the ranks of traditional assets. Being counted among stocks, bonds, and traditional currency is crucial for mainstream crypto adoption.
Considering that an ever-increasing number of members of the general public include digital assets in their investment portfolios, it’s time to take into account the ways in which crypto can be fully integrated into a regulatory system. These measures can become the incipient phase of worldwide blockchain development and introduction.
