Crypto Regulation Picture Mixed on a Global Scale
Cryptocurrency regulation had been one of the main factors influencing market valuations over the past few months. Even though many governments promised to implement a framework for crypto-related companies since a few years ago, that had not turned out as expected. Uncertainty around this issue had emerged once again in 2021, especially since the global picture is mixed, with countries on both sides of the aisle – some with crypto-friendly vision, and others unwilling to embrace these assets.
El Salvador’s Bitcoin Law
El Salvador is one of the positive examples, as it has enacted a Bitcoin law, which will come into effect on September 7th. According to Forbes, every adult in the country will receive $30 worth of BTC when they download and register the government’s cryptocurrency app. Even though people will be able to use it as legal tender, the US dollar will continue to be an official medium of exchange, and BTC will be another option on the table.
International institutions had been criticizing the move, mainly due to the volatile nature of BTC. However, salaries and pensions in the country will be paid in dollars, and people choosing to be paid in BTC can exchange into USD at any point.
South Africa Rushes to Regulate Crypto
During June, news broke about South African cryptocurrency investment firm AfriCrypt that had shut down, claiming to be a victim of an online hack. However, it turned out the company laundered its holdings worth $3.6 billion in Bitcoin and now its founders can’t be found.
It was one of the factors that generated strong selling pressure across the board, as trading via cryptocurrency derivatives as well as exchanges surged and Bitcoin continued to lose ground. On top of that, the South African government now promises to implement crypto regulation within 3 to 6 months.
The UK – Another country to move on this front
Binance, one of the most popular exchanges in the world “is not permitted to undertake any regulated activity in the UK”, as Britain’s Financial Conduct Authority stated at the end of June. According to CNBC, this is yet another sign of a growing crackdown on cryptocurrencies on a global scale.
Starting with June 30th, British citizens are no longer able to conduct cryptocurrency trading via Binance, after the company failed to meet the FCA’s anti-money laundering requirements:
“BINANCE MARKETS LIMITED IS NOT PERMITTED TO UNDERTAKE ANY REGULATED ACTIVITY IN THE U.K. Due to the imposition of requirements by the FCA, Binance Markets Limited is not currently permitted to undertake any regulated activities without the prior written consent of the FCA.”
The global cryptocurrency market capitalization reached $2.4 trillion in 2021 but the selling that occurred over the past three months erased more than $1 trillion in valuation. The developments resemble what happened in 2018, when the cryptocurrency market bubble burst, the fear of cryptocurrency regulation being one of the main triggers. How and when global crypto regulation will become reality will be key in determining how valuations can perform in the future.
