What the Last Year in Global Crypto Augers for 2023
The coming year has a lot of potential in the realm of crypto regulatory reform, and even more pitfalls. As we’ve discussed, TradFi is using some of the spectacular fails of 2022 as justification to lobby lawmakers to pass burdensome rules that will advantage Wall Street and banks at the expense of the burgeoning cryptocurrency industry.
On the other side of the ledger, however, various nations and key lawmakers have tempered skepticism of the industry, and are working towards solutions we believe could be viable that could ensure customer and investor confidence without fettering the industry. The bottom line is it’s going to be a tumultuous year but there’s a lot of positives out there.
Cointelegraph assesses the changes in global attitudes and regulation towards crypto in the last year, and discusses what it means for 2023.
China’s blanket ban on crypto mining and trading from late 2021 positioned the United States as the torchbearer for crypto disruption by default. The U.S. is not only home to the biggest crypto ATM network, but is also is the highest contributor to the Bitcoin Citing the FTX collapse, the Canadian Securities Administrators — an umbrella group of securities regulators across Canada — banned crypto leverage and margin trading to protect investors. In addition, Canadian energy provider Hydro-Québec rolled out plans to reallocate energy supplied to crypto mining firms, citing the high energy demands anticipated during the harsh Canadian winter.
Similarly, U.S. regulators introduced the Crypto-Asset Environmental Transparency Act to direct the Environmental Protection Agency to report on the energy use and environmental impact of crypto miners hash rate.
Out of all crypto sub-ecosystems, nonfungible tokens (NFTs) took center stage in U.S. politics. What can be considered as a clear win for crypto, the Federal Election Commission (FEC) permitted the use of NFTs for political campaign fundraising incentives.
For many regulators, the collapse of FTX and the arrest of former CEO Sam Bankman-Fried were perceived as a representation of the wrongdoings of the entire crypto community. As a result, it helped recement anti-crypto sentiment among many U.S. politicians, such as Representative Brad Sherman. However, Representative Tom Emmer sided with the crypto community as he pointed out the community’s contribution to tracking Bankman-Fried’s illegal activities.
After careful consideration, numerous Asian regulators softened their anti-crypto stance and chose to allow crypto businesses to run operations. While China loosened its grip on its crypto permaban, India has implemented a new tax regime for crypto.
In the case of China, the Shanghai High People’s Court issued a ruling stating that Bitcoin is subject to property rights laws and regulations. With the court recognizing value, scarcity and disposability in the asset, Bitcoin owners received the right to compensation in a case involving an unpaid loan.
Europe and the Middle East
The Russia-Ukraine war indirectly showcased cryptocurrency’s prowess in serving the unbanked. As millions lost access to their life savings, cryptocurrencies came into the forefront as a savior.
Displaced citizens got help through crypto donations, while Russians fleeing the country used it to circumvent their home country's newly introduced currency controls. Just two weeks into the war, crowd funding helped raise over $108 million for Ukrainian war relief. Another organization raised $54 million worth of crypto funds to procure vests, scopes and unmanned aerial vehicles for Ukrainian fighters.
The European Union’s Committee of Permanent Representatives approved the Markets in Crypto-Assets framework, which aims to create a consistent regulatory framework for cryptocurrencies among European Union member states.
The International Monetary Fund, a major financial agency of the United Nations, called for increased regulation of Africa’s crypto markets. The Central African Republic reportedly passed a bill to legalize the use of cryptocurrencies in financial markets.
The United Kingdom sought regulatory amendments to place the crypto industry under tighter scrutiny. Reacting to the FTX collapse, the U.K.’s HM Treasury issued guidelines for the Financial Conduct Authority to monitor the operations and advertising of crypto companies in the country. This further influenced an upcoming 2023 legislation to restrict crypto services from abroad from operating in the U.K.
South Africa's financial regulator, the Financial Sector Conduct Authority, updated the country’s 2002 Financial Advisory and Financial Intermediary Services Act to declare crypto as a financial product subject to financial services law.