No more whack-a-mole
This time last year regulation in the cryptocurrency space was considerably less organized and much less standardized than what we see today. Regulators were playing a game of what Bloomberg defined as whack-a-mole, as they tried to make sense of this emerging industry.
In September 2018, legislators have a much firmer footing — they may not yet be aware of the potential impact of decentralization, but they are giving it due time and consideration. Industry legislation, for the most part, has taken significant steps forward in the last twelve months.
Here’s a quick rundown of regulatory standards in crypto as they stood in September 2017.
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Macro-influencers in the crypto space
The SEC’s initial rejection and subsequent reconsideration of bitcoin ETFs had the crypto-world reverberating through August. And after new rulings by Congress that all House Members should disclose any crypto holdings, a number of congressmen and women have come forward. Meanwhile, a self-regulatory committee (VCA), led by the Winklevoss brothers, is set to meet for the first time this month to discuss the current state of US crypto legislation.
States in the news
A Californian blockchain bill has just recently been finalized, which will put into action a blockchain study group that will explore the potential of the technology within the state, and further define the legal status of digital assets in California.
The state of Vermont is hoping to attract cryptocurrency businesses and spur economic innovation with its newly minted law. Described in a nutshell, the law “provides the opportunity for companies looking to come down on the side of the consumer with regard to data privacy.”
Within the same month in China, a blockchain 101 was published for government officials to familiarize themselves with the tech, whilst a major crackdown began on crypto activity for users of major communication and payment channels like WeChat and Tencent. The detention of OKEx founder Star Xu on suspected fraud has also caused quite a stir.
No official announcements have been made by the Chinese government thus far regarding regulation, but the global industry continues to be perplexed by the ongoing rate of blockchain development in China despite such prohibition.
The newly-appointed chief of the Financial Services Authority, Japan’s primary financial regulator, is backing growth in the cryptocurrency industry and has stated from the get-go that he does not intend to impose ‘excessive’ regulations on the space. That being said, legislation is being looked at in the area of speculative investing in Japan, and the screening process for applicants registering on cryptocurrency exchanges has increased considerably.
Continuing its push for blockchain growth, a $4 billion (US) dollar budget for innovation will have a big focus on blockchain in 2019. In addition, a Blockchain Law Society has been set up by a group of judges, lawmakers and industry experts to discuss the legalities of the tech.
Meanwhile, there have been a few rumors that a North Korean blockchain and cryptocurrency conference is in the works with a provisional event date set for October.
We didn’t get the summer news we were expecting from Russian officials in terms of cryptocurrency regulation, and many are still speculating as to the potential outcome. With widely differing opinions being released on the subject by various Russian government officials, the immediate regulatory landscape for digital assets in Russia remains unclear.
The Finance Ministers of the European Union member states met this month to discuss current regulation in the crypto industry and whether or not it needs to be tightened with regard to potential issues such as terrorist activities and money-laundering. The response from the meet was generally positive, with European Commission Vice-President Valdis Dombrovskis quoted as saying cryptocurrencies ‘are here to stay despite market turbulence’.
While Poland had previously made a staunchly anti-cryptocurrency bid only earlier this year, the country seems to have come on board more recently when it comes to regulating digital assets, and the Polish government is currently drafting guidelines for taxing crypto holders.
Following complaints that the Belgian financial watchdog (FSMA) has received from a number of cryptocurrency investors, the organization has updated it’s ‘warning list’ of cryptocurrency businesses operating within its borders which do not comply with Belgian financial legislation.
Liechtenstein is making a name for itself as a crypto haven — with the announcement by Union Bank AG that they are launching a security token in line with Liechtenstein’s regulatory authority — as well as a positive regulatory assessment of crypto exchange ETERBASE.
Micro-influencers in the crypto space
Hong Kong’s updated immigration policy now includes a special visa for innovative tech developers. This news, along with the recent acquisition of the world’s most expensive skyscraper in Hong Kong by exchange-giant BitMEX, indicates the importance that is being put on growth in the blockchain and cryptocurrency space.
As mainland China continues to prohibit more and more crypto activity, will we see Chinese blockchain businesses moving to neighboring zones – like Hong Kong – in the future?
The nation of Taiwan is also looking to make regulation more welcoming for the blockchain industry within its shores. With no current digital asset legislation as such, aside from some recent efforts to combat money laundering, congressman Jason Hsu — the ‘Crypto Congressman’ — is pushing for a liberal approach to be taken by the Taiwanese government.
Uzbekistan has been actively working towards legislation for the cryptocurrency sector for a while now. With the recent setup of a Blockchain Development Fund called ‘Digital Trust’, along with a Memorandum of Agreement with the Korean Blockchain Business Association to facilitate growth in the sector, Uzbekistan is showing that they are willing to invest time and money to promote innovation in this emerging market.
While the Samoan government has publicly stated that it is a big fan of the potential of blockchain tech for its economy, it is making a firm stand against any illicit activities that might be completed through cryptocurrency, and the government’s plan going forward is that digital asset businesses will be dealt with the same legal rigor as financial institutions.
The Canadian government has just announced their decision to postpone crypto regulation decisions until 2020. Some may see this as a troubling move as it neither stifles nor encourages innovation in the sector, while others believe it is positive to keep regulation open. Could it be a case that US blockchain businesses will continue moving northwards to benefit from the current wide-open space that Canada is creating for crypto innovation?
No longer a wait and see approach to digital asset legislation in South Africa, the Revenue Service has just released a draft of proposed cryptocurrency tax legislation. However, while investors will need to declare their crypto holdings, they will not be subject to VAT measures. The current draft is a work in progress and editions will be made as and when needed.
The dawn of self-regulation
As countries are taking differing stances on digital asset legislation, several self-regulatory cryptocurrency bodies are being set up by influencers in the US, Japan, South Korea, and the UK. Will this lead to an advent of self-regulatory committees in various other countries? And how will they work with their governments to find a compromise between both worlds?
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