When it comes to cryptocurrency/blockchain regulation, considerable attention has been focused, this past year, on the United States' action (or inact
When it comes to cryptocurrency/blockchain regulation, considerable attention has been focused, this past year, on the United States’ action (or inaction). But the U.S. is not the world, just one important player, and crypto, from its beginnings, has been a global enterprise.
Perhaps, then, it makes sense to step back and ask: What is going on with crypto regulation when viewed through a global lens?
For instance, how do geographic regions such as Europe, Asia and North America compare in terms of crypto legislation, rules and enforcement? Is there any single country or jurisdiction that could serve as an exemplar for regulation? How is the developing world dealing with all this variation? And finally, are there reasons to be hopeful about the way regulatory trends are now unfolding?
If one focuses solely on the negative — the tide of crypto-related collapses, bankruptcies and enforcement actions in the United States this past year — a skewed picture can emerge. Progress in places like Europe might be overlooked, like the European Union’s recent adoption of its Markets in Crypto-Assets (MiCA) regulatory framework.
“Through MiCA, the European Union has been a global model by offering the much needed regulatory clarity that crypto businesses of varying sizes and business models would need,” Caroline Malcolm, vice president of global Policy at Chainalysis, told Cointelegraph, adding:
“Regulatory clarity and consistent implementation of rules will allow businesses to devise their operational program.”
Nor is Europe necessarily alone in pursuing a forward-looking path. “There is massive momentum on achieving regulatory clarity for digital assets across the world, whether that be in the U.S., Singapore, the UAE or others,” Malcolm said.
A fragmented world
Despite some promising trends, global crypto regulation — laws, rules, enforcement, taxation, etc. — remains a mixed bag.
“There’s a lot of fragmentation when it comes to regulation depending on the jurisdictions and geographical areas,” Bertrand Perez, CEO of the Web3 Foundation, told Cointelegraph in an interview earlier this week.
“In the U.S. we know, we know what’s happening or what is not happening over there,” continued Perez, who earlier served as chief operations officer at the Diem Association (formerly Libra, Facebook’s high-profile but ultimately failed stablecoin experiment).
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Europe’s MiCA regulations, by comparison, focus on stablecoins. Indeed, MiCA is the EU’s “answer to the Libra project,” Perez said.
Significantly, the Europeans recognize that one can’t have a single regulatory framework for everything crypto, he added. MiCA is step one, “but then they’ve been slicing the use cases.” There will eventually be another regulatory framework for nonfungible tokens and another for metaverse-related use cases.
The EU doesn’t hold a monopoly on progressive thinking either. Switzerland, which is not an EU member, was the first country to develop a clear crypto framework back in 2018.
The Swiss regulatory scheme separates tokens into three categories: security (a.k.a. “asset”) tokens, utility tokens and payment tokens, and also provides a number of licensing schemes dependent on the project’s structure.
In the U.S., by comparison, the Securities and Exchange Commission appears to have categorized all digital tokens — with the possible exception of Bitcoin — as security tokens. But in Switzerland, according to Perez:
“If you are a utility token and or if you’re a security token, the rules of the road are completely different from the regulation perspective.”
The legal certainty that Switzerland has offered for several years now is the reason that so many crypto-related foundations and companies are based there and the reason so much Web3 innovation comes out of that country, he said. The Web3 Foundation, creator of the Polkadot protocol, is based in Zug, Switzerland.
Historically, Singapore followed Switzerland’s lead, and for a while, those two venues stood alone in terms of crypto rule-making clarity. “In 2019, when we announced Libra, there were those two choices, either Switzerland or Singapore, in terms of regulation,” Perez recalled. “The two countries were clearly leading the pack and having clear frameworks that were well defined.”
The evolving case of Japan
Today, there are more approaches. “In Asia as a geographical area, every country is having a different approach” to regulation, Perez continued.
However, Japan is one jurisdiction that is attracting more attention than the others. Japan was formerly the home of Mt. Gox, which was the subject of crypto’s first mega scandal. When that cryptocurrency exchange collapsed in 2014, it arguably made Japan crypto-wary. But if so, the island nation seems to be emerging from its isolation now — at least based on discussions Perez and others have held…
cointelegraph.com
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