Regulation of cryptocurrencies around the world


The coming of age of every new financial instrument is heralded by regulation. Some may argue that cryptocurrencies don't need any help from the authorities, thank you very much. There is also no need for a handicap. A 2018 study by the BIS that examined the actual behavior of cryptocurrency markets in response to regulation showed that, despite the limitless and peer-to-peer nature of cryptocurrencies, regulatory action and news of potential regulatory action has a strong impact on the market Cryptocurrency markets. These included negative shocks from strong news on money laundering and KYC, as well as uptrends as legal certainty arose. Regulation often boasts of being technology neutral and interested only in regulating economic effects. In practice, technology is often used to take advantage of regulatory arbitrage and avoid the effects of crossing borders. A global limitless cryptocurrency does this very well due to its technical and game theory capabilities. The FATF recommendations with cross-border influence were therefore seen as more effective than the piecemeal regulation by several countries. Many cryptocurrency influencers also believed that it is better to have security in regulation than to let a sword of Damocles hang over the entire sector. This is evidenced by the impact on net worth and transaction volume in the BIS report.

The Crypto Assets Markets (MiCA) proposal is part of the European Union's digital finance strategy, a project to create a single European market for capital called Capital Markets Union. Strategically, this is part of the continuum of the association, from physical transport connections to legal identity (eIDAS), limitless travel to the right to visit and settlement.

G7-2017 TAORMINA

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MiCA targets crypto assets and sets up regulation for assets like stablecoins and crypto asset service providers (CASPs). In this respect, it is similar to the regulation of VASPs (Virtual Asset Service Providers) in the FATF proposal and the harmonization of the rules across national borders and across the various asset classes. This focus on service providers is one way of realizing something in a world that is supposed to have no intermediaries. In reality, without the world's Coindesk and Binance, cryptocurrencies would not have grown as much as they did. This is what the supervisory authorities are paying attention to. Places for exchange, for market making, the analogue to banks, are also found in the cryptocurrency space. MiCA defines crypto assets by absence, meaning digital assets that are currently outside the scope of financial oversight, especially stablecoins, are being dragged into the financially regulated world.

The logic that drove the infrastructure billing add-ons in the US targeted intermediaries to squeeze taxes out of transactions to pay the bill. How the drafters made the $ 28 billion tax evasion estimate for crypto transactions is unknown. The definition of a broker: any person who is responsible (for a fee) for regularly providing services that effect transfers of digital assets on behalf of another person. This definition comes close to that of a CASP. Providers of crypto asset services. What is waived in less than 100 words in the Infrastructure Bill in the USA takes up 168 pages in the MiCA proposal. That's the difference, it's a well-thought-out proposal with provisions for comments, not a last-minute interpolation of 100 words in an independent bill. The StableAct, which was a much more elaborate proposition, had no way forward in the US.

The Chinese had already banned Renminbi-based stablecoins with just one sentence in Article 22 (Token): "No entity or individual may manufacture or sell tokens, coupons and digital tokens to replace the RMB on the market." This would at least prohibit any stable coin that is directly linked to the RMB, as RMB would have to be taken from circulation in a reserve in order to issue such a stable coin. That plus all the steps against crypto assets in China to shore up their CBDC.

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