Here’s How Institutional Adoption and Crypto Regulation are Evolving Globally
Summary:
- Global adoption continues to be well beyond the levels that existed before the 2020 bull market, although growth has grown more erratic since the start of the most recent bear market
- FLUID has put together a list of the most significant news stories from the past few months, including the European Commission’s approval of Markets in Crypto-assets Regulation, Australia’s plans for a CBDC pilot project in Q1 2023, South Africa’s approval of crypto assets to be regulated as financial products, and more
Cryptocurrency regulation can have both positive and negative impacts. On the positive side, regulation can provide a level of legitimacy to the cryptocurrency industry and make it more attractive to mainstream investors. It can also help to prevent illegal activities such as money laundering and terrorist financing. On the negative side, regulation can stifle innovation and limit the potential for growth in the cryptocurrency industry.
Reasons for adoption of cryptocurrency:
Decentralization: Cryptocurrencies operate on decentralized blockchain technology, which means they are not controlled by any central authority or institution.
Anonymity: Cryptocurrencies offer users a certain degree of anonymity in their transactions, which is appealing to those who value privacy.
Security: Cryptocurrencies use advanced encryption techniques to ensure the security of transactions and prevent fraud.
Accessibility: Cryptocurrencies can be used by anyone with an internet connection and a digital wallet, regardless of their location or financial status.
Potential for high returns: Some people invest in cryptocurrencies because they believe they have the potential to provide high returns on investment.
U.K. Lawmakers Vote to Recognize Crypto as Regulated Financial Instruments
The lower house of Parliament agreed to include cryptocurrencies in the list of activities that would be governed by the Financial Services and Markets Bill, which already intends to include stablecoins in the scope of payment regulations.
The proposed Financial Services and Markets Bill, which broadly addresses the U.K.’s post-Brexit economic policy, was read aloud in the House of Commons, the Parliament’s lower house. A number of modifications to the bill were put forward, including one by Senator Andrew Griffith to include digital currency holdings under the purview of the nation’s regulated financial services.
Stablecoins focusing on payments that are tied to the value of other assets like the U.S. dollar or gold were already covered by elements in the proposed law to expand current restrictions.
E.U. approves crypto assets regulation: an overview of MiCA
Following the European Council’s ratification of the Markets in Crypto-assets Regulation (“MiCA” or the “Regulation”) on October 5, 2022, it has finally come to pass. The MiCA is anticipated to be approved and published in the Official Journal in Q1 2023 (entering into force 20 days later), with the majority of the rules set to take effect 12 to 18 months after that, providing a sizable grace period. When it comes into effect, it will create a unified regulatory framework for cryptocurrencies at the level of the European Union. It will be the first global instrument to establish such a framework for both the issuers and the service providers of cryptocurrencies, as well as for specific categories of cryptocurrencies in general.
By allowing for innovation in a way that prioritizes financial stability, market integrity, and investor protection, the E.U. is unquestionably showing that it is ahead of the curve in crypto-assets and its efforts to bring crypto-asset markets within the scope of financial services regulation.
France approves its third-biggest bank to operate digital asset services
The massive French bank Société Générale has received authorization to run digital asset services through its affiliate Forge. The French regulatory body’s decision entitles it to custody, sale, and trading of digital assets.
It is following similar regulatory decisions made by the Autorité des Marchés Financiers (AMF) regarding foreign cryptocurrency firms like Crypto.com, Binance, and Luno.
Japan to Further Relax Crypto Rules by Easing Listings of Tokens
The Crypto Association expects to ease up on screening, which is another indication that Japan wants to revive the cryptocurrency industry. By making it simpler to list virtual coins, Japan aims to relax further cryptocurrency regulations, which might increase the country’s appeal to Binance and other overseas digital-asset exchanges.
According to papers obtained by Bloomberg News, the organization that oversees cryptocurrency exchanges intends to permit them to sell coins without subjecting them to its time-consuming screening procedure unless the tokens are brand-new to the Japanese market.
Thailand and Hungary to jointly explore blockchain tech
A bilateral Memorandum of Understanding (MOU) has been signed by Thailand’s and Hungary’s financial technology organizations to facilitate the use of blockchain technology in their respective financial sectors.
According to a Facebook post by the Hungarian Embassy in Bangkok, the MOU between the Thai Fintech Association (TFA) and the Hungarian Blockchain Coalition would allow the two organizations to “exchange experiences, best practices, and investigate areas potentially useful for direct cooperation.”
According to a Bangkok Post article dated October 29, TFA President Chonladet Khemarattana stated that international collaboration is required to advance local financial technology since e-commerce, mobile payments, and digital currencies are expanding quickly in Thailand.
Crypto Assets get green-lighted by FSCA
In South Africa, cryptocurrency assets will be regarded as financial goods, making it simpler for authorities to keep an eye on the market and contribute to consumer protection.
In a gazette notification, the Financial Sector Conduct Authority described crypto assets as “a digital representation of value.” According to the release, a crypto asset can be electronically exchanged, transferred, or held for use as a form of payment, an investment, or for other purposes without being issued by the central bank.
According to Brent Peterson, head of legal at cryptocurrency exchange Easy Crypto Ltd., the statement is the first official step to bring the crypto-asset business under South African law.
Australia central bank aims for a digital currency pilot next year
The Reserve Bank of Australia (RBA) stated that it will likely run a trial in early 2023 and is trying to develop business models and uses for a central bank digital currency (CBDC), or eAUD. It published a white paper presenting a complex strategy for implementing an eAUD pilot project.
The RBA and the Digital Finance Cooperative Research Centre stated that the study, which started in July, will “better comprehend some of the technological, legal and regulatory challenges connected with a CBDC” (DFCRRC). The main goals of the project are to find and comprehend creative business models, use cases, advantages, dangers, and operational models for an Australian CBDC.
The RBA announced its partnership with the DFCRC to investigate CBDC use cases for Australia at the beginning of August. According to the white paper titled “Australian CBDC Pilot for Digital Finance Innovation,” which was developed as a result of the collaborative research, “the key objectives of the project are to identify and understand innovative business models, use cases, benefits, risks, and operational models for a CBDC in Australia.”
Countries all over the world are moving towards mass adoption of cryptocurrencies. Some are trying to regulate it and put forward a unified framework, while others look for ways to allow for more innovation and acceptance.
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