Global Trends In Cryptocurrency Regulation

Digitalization is the future, which is one reason cryptocurrency is the fastest-growing currency. Ideally, it is a digital form of payment system, so you don’t have to rely on banks for transaction verification. 

Cryptocurrency is the fastest corresponding system; you can easily send and receive payments, unlike real money. Bitcoin is the first cryptocurrency, and most people know about it; it is still popular globally. Ironically, the crypto regulations don’t have firm ground, even though Bitcoin is the most popular bet worldwide. 

Governments from different countries and financial regulators are working on ways to control the use of cryptocurrency. However, there are already some global trends in cryptocurrency regulations that you should know about. So, let’s take a look at some of the vital ones.

More Push for Global Cryptocurrency Regulations 

The International Organisation of Securities Commissions (IOSCO) is an accredited financial agency with 100+ world members. The chairman seeks to create a global group, much like climate finance under the G20. The commission wishes to regulate nearly 90% of the global cryptocurrency market in 2023. 

According to the commission, crypto regulation is significant for two primary reasons: strict global rules that will help fight cybersecurity challenges. Another is regulation as support for vulnerable financial and climate investors. However, the ultimate aim is to organize and control the unbridled emerging crypto market.

Countries that are Implementing Cryptocurrency Regulations 

It has been a long time since cryptocurrency grew from being a speculative investment to a new, promising financial asset. However, being in the nascent stage, this market prompted most nations to create cryptographic rules and laws. Most of them have already started the process and are also planning to develop more global and stricter crypto laws by 2023. 

In the coming years, these rules can impact global money transactions and the way countries trade. Some nations will apply flexible rules, but some can go against the currency. Let’s take a look at a few of the nations and their stances on cryptocurrency. Here are some real-world instances:

The UK

• Their Financial Conduct Authority had earlier alerted their citizens about the use and implications of cryptos in 2021. 
• There was another statement by the FCA in the following year, which stated that digital currency can lead to money laundering cases and give importance to financial activities that might lead to risk.
• Thus, the UK government plans to implement a complete crypto framework to establish effective crypto rules in the coming years.

Europe

• The European Commission suggested a new currency framework proposal, Markets in Crypto Assets (MiCA) rules, in 2020 to organize the crypto transaction scene. 
• These rules are reaching their prime of implementation in 2023 and are subject to safeguarding crypto-related activities, including long-term trades. 
• Also, the proposed rules will strengthen market interests and safeguard investors. 

The US

• The Security and Exchange Commission (SEC) of the US categorizes cryptocurrency and related firms in the high-risk group. 
• They issued new cryptocurrency rules last year, which require companies under federal securities law to disclose direct or indirect relations with crypto companies that have been insolvent or bankrupt.

India

• The Indian government is planning on drafting new crypto rules, but to regulate the crypto market, they currently follow the tax system. 
• The country currently imposes a 30% tax on added crypto gains.

Along with these countries trying to find pacified ways to deal with crypto, some countries like Singapore, Belarus, and Switzerland are extremely pro-crypto and have included it as part of their legal currency or offered tax incentives to citizens for holding digital assets. On the other hand, some countries, like Argentina, outright discouraged the use of digital currency to receive large amounts of loans from the International Monetary Fund (IMF).

Cryptocurrency Rules Will Become Rigid

In the coming years, cryptocurrency regulations will become more stringent. One of the main reasons for this change is the recent issues in the global cryptocurrency market. 

For instance, FTX’s cryptocurrency exchange dealt a massive blow to the currency’s worthiness. FTX, one of the largest cryptocurrency exchange platforms, filed for bankruptcy as their scam unfolded for false representation and deceptive conduct. It did send the wrong message to global financial communities.  

Specific action against people who misuse cryptocurrency for personal goals should be highlighted. With that, the financial regulation companies get inspired to take legal action against defaulters. Plus, the move will protect the interests of investors. 

An article by the Financial Times highlighted the issue and the need for stable and strict cryptocurrency regulations. Moreover, the International Financial Stability Board has intended to expedite the work to create new and strict rules globally in response to the cryptocurrency scandals. According to them, the planning part is synonymous with market urgency. 

The IMF Strives to Speed Up New Regulations Globally  

Like cryptocurrency agencies, the IMF wants to speed up the crypto rules in the finance market. Earlier, the agency also made changes to the global crypto rules. Moreover, they are more concerned about the potential for terrorist funding and the misuse of it in money fraud. The IMF now seeks joint efforts with rigid rules that will cross all borders to supervise these activities worldwide.

Also, they want a global solution before the digital currency market becomes more complex. So, during the G20 meeting in 2023, they worked on a proposal to establish a viable trust in this market. They chalked out key policy recommendations that featured three key pillars, namely, “sound macro-policy foundation, clear legal treatment and granular rules, and effective implementation.”

A Glance at Other Crypto Trends That Need Market Regulation

NFTs

NFTs are popularly called non-fungible tokens. You can represent them digitally, which is an added advantage. Though initiated in 2014, it was only recently that it got global recognition. Moreover, the diverse nature of this currency has intrigued the interests of many top companies and individuals. 

Even big brands and companies now use the NFT pool. The best part about NFTs is that they are limitless, so there is no cap. 

The best example of the money is in the use of the popular gaming sector. Pro gamers use it to trade in-game products using blockchain platforms like NFT. 

Decentralized Finance 

Decentralized Finance (DeFi) is a well-accepted global trend. It works on the enclosed system of diverse financial services, which is built on a blockchain network. 

Ideally, it has witnessed tremendous growth in the last few years. The two most significant changes in DeFi are Layer 2 solutions and Cross-chain interoperability.  

These two concepts can enhance the blockchain network and change accessibility. Layer 2 solutions can improve the blockchain, resulting in efficiency and speed. Cross-chain interoperability can help decentralized apps on the blockchain interact well.  

To conclude, 

Cryptocurrency regulations are still in the research phase worldwide. There is a need to embrace a holistic approach and implement rules, regulations, recommendations, and policies at the domestic and international levels to safeguard monetary sovereignty. 

Though partial regulations exist in most countries, the remaining need is to take all essential steps to regulate the space as soon as possible. With preventive measures in place, it will safeguard the interests of investors worldwide and naturally promote the financial stability of cryptocurrency in this digital age.

Author:Harikrishna Kundariya

Harikrishna Kundariya is the Co-founder, Director, & Marketer of eSparkBiz Technologies – an excellent Software Development Company. Also, a notable IoT, ChatBot & Blockchain-savvy Developer. His 12+ years of profound experience enables him to create Digital Innovations for Startups & large Enterprises alike based on futuristic technologies like IoT, Artificial Intelligence, DevOps, and ChatBot. Adopting a modern yet extremely flexible leadership approach, he believes in building businesses & lasting bonds with his clients in the process.