Crypto assets and similar products have grown rapidly in 2021 and interlinkages with the regulated financial system are rising.
Policymakers around the world, however, still struggle to track risks from this evolving sector, in which many activities are unregulated.
Here are the top regulations and rules implemented by countries around the world:
United States of America
The US has regulations under the central and state governments which mean that rules differ from state to state. The overall sentiment, however, is positive.
The Biden administration’s $1tn infrastructure deal signed into law contains provisions for cryptocurrency taxes, but their implementation is still not clearly defined.
While other legislation regarding cryptocurrency regulation has stalled in Congress, some industry leaders have described the most prominent proposal to date, known as the ‘Stable Act’, as a ‘disaster’, arguing that it would stifle innovation and prevent individuals from participating in cryptocurrency networks.
United Arab Emirates
The UAE has been forward-looking in crypto and blockchain.
The Dubai Financial Services Authority (DFSA) included a crypto regulatory framework in its 2021 business plan for firms operating in the Dubai International Financial Center.
China has been the toughest towards cryptocurrencies, going from, what seemed to be a welcoming attitude towards a complete ban on mining as of June 2021.
The move was so impactful it briefly slashed approximately 40% of total crypto mining operations.
The country is, however, developing a digital Yuan and has already begun real-world trials of the centrally regulated crypto.
The UK does not have specific legislation on cryptocurrencies and the sector is currently governed by the Financial Conduct Authority (FCA), which grants licenses for crypto businesses and exchanges.
The country published a call for evidence on digital assets in April 2021, and the request seeks input from stakeholders ahead of the publication of a consultation paper on digital assets which will make proposals for new laws.
Also, the Bank of England has recently called for enhanced regulatory and law enforcement frameworks, both domestically and at a global level.
Singapore has set clear rules where legislation for the sector is implemented under its Payment Services Act by the Monetary Authority of Singapore (MAS).
Further, buying, selling, holding, or transferring cryptocurrencies in Singapore requires an entity to seek a licence and comply with AML and CTF rules.
The South American country became the first to officially declare Bitcoin legal tender and has been buying the dip since.
In June, El Salvador’s parliament approved a law to allow the flagship crypto to be accepted as tender for all goods and services in the nation, along with the US dollar.
In 2020, Russian president Vladimir Putin signed a law that regulates digital financial asset transactions.
Under the law, which took effect on January 1 2021, digital currencies are recognised as a payment means and investment.
However, digital currency cannot be used to pay for any goods and services.
The ‘Cryptocurrency and Regulation of Official Digital Currency Bill, 2021′ seeks to create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India (RBI).
The bill also seeks to prohibit all private cryptocurrencies in India. However, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.