Do you feel that the world of finance is constantly changing? Welcome to the cryptocurrency era! We will show how the regulation of this financial instrument is changing and how it affects your financial future.
Cryptocurrency is not just a hot topic – it is changing traditional financial systems. Countries are actively exploring cryptocurrencies, and developing strategies and regulatory approaches.
A few years ago, many countries were critical of digital assets: bans, warnings... But the situation is changing. Now, states see cryptocurrency as a potential development and investment attraction tool.
In November 2021, the President's Financial Markets Working Group (PWG) proposed that stablecoins be registered as insured depository institutions. PWGs propose to subject them to banking regulation, extending to them risk management, capital, and liquidity requirements.
Later initiatives in Congress look at stablecoins from a different angle. In particular, the Responsible Financial Innovation Act proposes establishing requirements for 1:1 reserves and information disclosure. This law does not force all stablecoins to become depository institutions but offers a new regulatory framework.
The US has chosen a wait-and-see strategy for Central Bank Digital Currency (CBDC). The Federal Reserve Bank continues active research in this direction.
From 2020, companies carrying out business activities related to cryptocurrencies (such as buying and selling cryptocurrencies) must comply with the Money Laundering, Terrorist Financing and Funds Transfer Regulations 2017.
Such companies must be registered with the Financial Conduct Authority before starting their business and have the appropriate authorization from the Financial Conduct Authority (FCA) if their activities involve crypto-assets defined as financial instruments.
In October 2022, the House of Commons voted to regulate crypto-assets by extending the Financial Services and Markets Act 2000 to these assets.
In December 2021, Australia implemented digital asset regulation, including new licensing regimes, decentralized organizational structures, and a tax overhaul.
The Australian Securities Commission has identified crypto-assets as one of its key strategic priority areas. It is developing a legal framework to protect consumers and ensure market integrity.
In September 2022, the Reserve Bank of Australia presented its research into the potential implementation of CBDC, with plans to launch a pilot project in 2023.
In December 2020, the Bahamas passed the Digital Assets and Registered Exchanges (DARE) Act. This Act creates the legal framework to regulate digital asset issuance, sale, and transfer in the Bahamas and beyond.
The Bahamas Securities Commission (the Commission) has the authority to regulate and supervise the issuance of digital assets. It develops rules and regulations for activities in this area, including requirements for initial token offerings. It also has the right to suspend or revoke registrations, conduct inspections and investigations, and apply administrative sanctions.
Any person or company wishing to conduct a digital asset business in or from the Bahamas must be registered with the Commission under DARE. It is necessary to provide founding documents, proof of legal activity, and complete identification of crucial participants and management personnel.
In 2017, the Government of Gibraltar enacted the Financial Services Regulations (DLT), which came into force in January 2018 — this regulation aimed to create a favorable environment for the crypto industry and attract investment.
There are currently approximately 15 regulated DLT providers operating in Gibraltar. They must submit their policies and reports to the GFSC (Gibraltar Financial Services Commission), demonstrating adherence to the ten core principles. This includes interviews, on-site inspections, and other control measures. The GFSC constantly monitors the performance of these suppliers.
The Government of Gibraltar maintains a positive attitude towards the crypto industry while creating a robust legal framework to mitigate risks.
This little research shows that the regulatory policies of cryptocurrencies do vary. Some states, like the United States or Gibraltar, are betting on supporting innovation and understanding cryptocurrencies' potential opportunities and economic development. On the other hand, countries such as Great Britain or the Bahamas establish clear regulatory frameworks to protect investors and financial stability.
For the business community, these trends present both advantages and challenges. The positive side is the possibility of entering new markets, attracting investments, and using innovative technologies. But with this comes risks, mainly due to the instability of regulatory decisions or potential restrictions in some jurisdictions.
To successfully conduct cryptocurrency business, carefully monitoring legislative innovations in different countries is necessary. The right choice of jurisdiction and a thorough understanding of local laws can be essential factors of success in this dynamic industry.