Author: Barbora Bělová
Date of Publication: 13/02/2023
Nowadays, there is a lot of fuss about cryptocurrencies. Due to that, it is the right time to discuss and focus on the regulation of cryptocurrency. In fact, we are witnessing the expansion of the cryptocurrency market, scams, failures, unfair dealing and so on. Let's see what's happening!
Cryptocurrency is a type of digital or virtual currency that is electronic encrypted data and operates independently of a central bank. The most well-known cryptocurrency is Bitcoin, but there are a lot of other types of cryptocurrencies as well. In fact, cryptocurrencies are decentralised, meaning that they aren’t controlled by any single subject. So, transactions with them are recorded on a public ledger (record-keeping system) called a blockchain. In addition, cryptocurrencies have the potential to disrupt traditional financial systems and offer new ways of transactions and storing value. However, they raise concerns about their security and stability.
Regulatory across states
Cryptocurrency regulation is the set of rules that govern the use and trade of digital currencies. In particular, different countries have different regulations, which can impact how these currencies are used, bought, and sold. So, the rules and regulations for cryptocurrencies are still changing and being figured out.
Some countries see the benefits of cryptocurrencies, but others are worried about potential problems like fraud and money laundering. As a result, there is a lot of variation in the way that different countries regulate cryptocurrencies. Therefore, different countries have different rules about cryptocurrencies. Here are a few examples:
●In Canada, cryptocurrencies are considered a commodity and are regulated by the Canadian Securities Administrators. Thus, investors are registered and that protects them.
●In the United States, the government has specific rules about cryptocurrencies. For example, the Securities and Exchange Commission (SEC) says that some cryptocurrencies are like stocks and must follow stock market rules. There are also rules to prevent fraud and illegal activities like money laundering.
● In Japan, the government has made it easy for people to use and buy cryptocurrencies. Actually, they have given special licences to companies that want to help people trade cryptocurrencies.
●In China, the government has made it harder for people to use cryptocurrencies. For example, they have banned initial coin offerings (ICOs) and limited the use of them as payment.
●In South Korea, the government has also placed some restrictions on the use of cryptocurrencies. Yet they are supportive of the technology behind cryptocurrencies.
●In Europe, the European Banking Authority has warned people about the risks of investing in cryptocurrencies and is calling for increased regulation to protect consumers. The EU is also thinking about making a single set of rules for all countries in Europe.
●In the United Kingdom, cryptocurrencies aren’t banned but they are subject to anti-money laundering regulations. In particular, the UK government has set up a task force to study cryptocurrencies and make recommendations for regulation.
●In Australia, cryptocurrency exchanges are required to register with the Australian Transaction Reports and Analysis Centre (AUSTRAC). Apart from that, they have to comply with anti-money laundering and counter-terrorism financing regulations.
●In Singapore, cryptocurrencies are allowed but they are subject to anti-money laundering regulations as well. Specifically, the Monetary Authority of Singapore is working on a regulatory framework for cryptocurrencies.
In conclusion, it's important to note that cryptocurrency regulation is constantly evolving, and the policies and rules governing this space can change rapidly. As such, it's recommended to stay up-to-date with the latest developments in your local jurisdiction.
Kaspersky. What is cryptocurrency and how does it work? Available from: https://www.kaspersky.com/resource-center/definitions/what-is-cryptocurrency
Ledger Academy. (2022). Ledger. https://www.ledger.com/academy/glossary/ledger
European Banking Authority (EBA). (2019). EBA reports on crypto-assets. Available from: https://www.eba.europa.eu/eba-reports-on-crypto-assets
Library of Congress. (2021). China: Central Bank Issues New Regulatory Document on Cryptocurrency Trading. Available from: https://www.loc.gov/item/global-legal-monitor/2021-10-13/china-central-bank-issues-new-regulatory-document-on-cryptocurrency-trading/
Canadian Securities Administrators. Regulation of Crypto Assets. Available from: https://www.securities-administrators.ca/investor-tools/crypto-assets/regulation-of-crypto-assets/
Securities and Exchange Commission (SEC). Crypto Assets and Cyber Enforcement Actions. Available from: https://www.sec.gov/spotlight/cybersecurity-enforcement-actions
Australian Government. (2023). Digital currency exchange providers. Available from: https://www.austrac.gov.au/business/industry-specific-guidance/digital-currency-exchange-providers
Global Illegal Insights. (2023). Blockchain & Cryptocurrency Laws and Regulations 2023. Available from: https://www.globallegalinsights.com/practice-areas/blockchain-laws-and-regulations