As the cryptocurrency world continues to evolve, so does the regulatory landscape that governs it. While regulators tighten their grip on cryptocurrency operations in the United States, transatlantic Europe is creating a more attractive environment for digital assets.
Meanwhile, in Asia, Japan is pushing for relaxed trading rules and tax cuts for cryptocurrency companies, while Singapore has taken a more cautious approach. Finally, in the Middle East, Dubai positions itself as a haven for cryptocurrency projects and their founders, but only on its own terms.
The U.S. Securities and Exchange Commission (SEC) recently sued major cryptocurrency exchanges Coinbase and Binance for violating federal securities laws and putting investors at risk. The SEC claims these platforms operate as unregistered brokers and list tokens such as Solana (SOL), Cardano (ADA) and Polygon (MATIC), which the SEC claims are securities. claims.
This regulatory oversight goes beyond the SEC. The Commodity Futures Trading Commission (CFTC) also sued Binance for alleged violations of commodity regulations, including allowing US citizens to use its cryptocurrency platform without registering with authorities.
Furthermore, when the CFTC accused Ooki DAO of operating an unregistered margin trading platform, it initially sought to hold all DAO members accountable (DAO is not a federally recognized entity in the United States). cannot provide liability protection to members). . However, the judge in the case ultimately ruled that it was sufficient to hold the DAO’s founders alone liable, but only because the court could identify who they were. is.
In contrast to the US, Europe has fostered a more welcoming environment for digital assets. The UK recently made cryptocurrencies a regulated financial activity, and the European Union passed the Crypto Asset Market (MiCA) Regulation, providing a harmonized regulatory framework for digital assets across the continent.
Bernd GeyerMiCA, Rimon’s legal expert, explains that it “establishes uniform requirements for public availability and permission to trade on cryptocurrency trading platforms, as well as requirements for cryptocurrency service providers.” The move is expected to foster innovation and remove barriers that hinder the growth potential of the cryptocurrency industry.
Asian mixed approach
In Asia, the regulatory landscape is mixed. Japan is promoting relaxation of margin trading rules to attract new investors. The Japan Virtual Crypto Asset Trading Association (JVCEA) has asked authorities to allow higher leverage limits for retail investors to encourage market growth.
Genki Oda, vice chairman of JVCEA, said, “Japan could become even more attractive to cryptocurrency and blockchain companies if margin trading caps are eased.”
Furthermore, the Japanese National Tax Agency recently exempted cryptocurrency token issuers from paying corporate tax on unrealized gains on their stock holdings, which is expected to ease the business environment for domestic cryptocurrency companies. be.
However, not all Asian countries have taken a mitigating approach. The central bank of Singapore recently banned lending and staking to retail investors, demonstrating a more cautious stance on cryptocurrency activity. South Korea also passed an investor protection law in June.
Ambitious plans for Dubai
In the Middle East, Dubai is making great strides to solidify itself as a global hub for cryptocurrencies. Both Ripple and Coinbase are facing regulatory challenges in the US and have announced plans to expand into Dubai, citing the region’s clear regulatory framework and potential as a global financial hub.
Ripple CEO Brad Garlinghouse also said 20% of Ripple’s customers are based in the Middle East and North Africa region, which has a “clear regulatory regime” and is becoming a global financial hub. and praised the regulatory situation in the region.
Coinbase CEO Brian Armstrong echoed these sentiments, praising the United Arab Emirates’ progressive regulatory efforts in the cryptocurrency space. He highlighted the country’s clear rulebook and strong customer protection as key factors in Coinbase’s decision to consider the UAE as a hub for international services.
However, Dubai’s approach to cryptocurrency regulation is not without its limitations. The Virtual Asset Regulatory Authority (VARA) has banned the issuance of privacy-focused cryptocurrencies such as Zcash (ZEC) and Monero (XMR) in the region, citing concerns over traceability of transactions.
What is clear from the recent spate of regulatory moves is that governments around the world are not lagging behind in the crypto space, they are catching up. The various communities embedding cryptocurrencies in their lives are on the verge of a global reorientation as countries grapple with how, or whether, to integrate these emerging technologies into their financial systems. is clear.