The upcoming budget proposal to be presented by US President Joe Biden will usher in a few surprises for [crypto](/news/article/is-crypto-dead) industry stakeholders.

Among them is cracking down on the entire decentralized finance (DeFi) industry concerning wash sales, according to a [Wall Street Journal](https://www.wsj.com/articles/biden-budget-to-propose-saving-hundreds-of-billions-by-cutting-drug-prices-fraud-5fa0f927) news report.

[Wash sale](https://www.investopedia.com/terms/w/washsale.asp) is a strategy some traders and investors use whereby they trade or sell a security at a loss and then buy a similar security 30 days before or after the sale.

The Wash Sale Rule was enacted by the Internal Revenue Service (IRS) in the 1920s and helped prevent investors from using losses from their capital to their advantage when the time comes for them to pay their taxes. 

While the rule applies to stocks and was later extended to options, contracts, and other types of trading and securities, the Wall Street Journal reports it will soon be applied to crypto.
This will end the use of the strategy and change the notion of the [crypto](/news/article/kraken-crypto-exchange-plans-bank-launch) sector being regarded as a tax haven. 

This Biden crypto rule is part of ameliorating the crypto tax treatment that aims to raise around $24 billion to help reduce the country's deficit by about $3 trillion over the next decade.

## Biden crypto rule changes are not the first

The latest stance taken by the US is seen as a positive on the global [regulatory](/news/article/is-crypto-regulated-across-the-globe#:~:text=Although%20crypto%20is%20not%20regulated,trading%20volume%20of%20centralized%20exchanges.) stage. Many industry experts believe that following actions by other regulatory bodies in countries such as Canada and Australia will help prevent crypto traders from taking advantage of the tax system and ensure they contribute their fair share in taxes, just like other investors profiting from trading.

## Capital gains to be doubled 

Capital gains tax (CGT) is paid on the profit made from selling an asset. The new US budget proposes doubling CGT from 20% to 39.6% on long-term investments that result in a minimum of $1 million in profits.

Aside from this, the budget plans to increase levies imposed on wealthy Americans and corporations.


Biden Crypto Rules to End Wash Sales Strategy 

UK-based payment processor specializing in linking crypto firms to the banking world, BCB Group, is ramping up its dollar-to-crypto capabilities following Silvergate Exchange Network (SEN) shutting down. The firm hopes to have the [fiat-to-crypto system](/news/article/crypto-banks-access) ready to roll early in the second quarter.

Speaking during a [media interview](https://www.coindesk.com/business/2023/03/06/crypto-banking-firm-bcb-readies-us-dollar-payments-to-plug-silvergate-gap/), the group's CEO, Oliver von Landsberg-Sadie, stated that the BCB Liquidity Interchange Network Consortium (BLINC) is a dollar component that has been in the pipeline for the last year and which will launch soon. He said the move is meant to plug the hole left by the departure of SEN, besides providing continuity to BCB and Silvergate clients. 

## BCB has a payment license from UK financial regulator

Launched in Mid-2020, BLINC facilitates a real-time settlement system for fiat currencies like the Euro, British Pound, and the Swiss Franc, similar to what Silvergate did for US-based crypto clients transacting in dollars. The firm provides fiat-to-crypto solutions to Europe's leading institutional players, including Galaxy Digital, Bitstamp, Kraken, and Gemini. London-based BCB has a payment license from the Financial Conduct Authority (FCA), the UK's regulator.

According to Landsberg-Sadie, unlike SEN, BLINC is multicurrency and not tied to a particular credit institution. It's purposely designed as a payment institution that provides onramps to numerous banks in the UK, Switzerland, and several other European countries.

Considering Silvergate's waterloo was when the firm allowed long-term Bitcoin bets against short-term cash deposits, a titanic feat during 2022's crazy markets, Landsberg-Sadie said the group's funds are 1:1, no leverage, no pledge, and always fully protected with safeguarded funds.

## An alternative to the Silvergate and Signature Bank networks

The firm’s move will help widen the space for crypto companies struggling to integrate with traditional banking systems by including USD capabilities.

The groups’ entry and launch of BLINC will offer an alternative to the Silvergate and New York-based Signature Bank's networks. BLINC introduces a decentralized model that provides excellent stability and security to clients, giving it great potential within the crypto payments space. Signature's Signet is currently the following largest network for USD instant settlement.

Crypto companies that hoped to revitalize traditional banking by integrating cryptocurrency have always been skating on thin ice. Consequently, the accompanying [crashes such as FTX](/news/article/is-crypto-dead) and scandals that sparked a cacophony of responses from US-based regulators are almost suffocating the nascent crypto-banking startups.


BCB Group Acts to Close Silvergate Gap

Crypto lawyers have rejected cryptocurrency claims made by SEC chair Gary Gensler, who recently stated in an interview that all cryptocurrencies except Bitcoin are securities that fall under its jurisdiction.

In an [interview](https://nymag.com/intelligencer/2023/02/gary-gensler-on-meeting-with-sbf-and-his-crypto-crackdown.html) with New York Magazine on 23 February, Gensler stated that "everything other than Bitcoin" falls under the US Securities and Exchange's jurisdiction as a security. He elaborated that crypto projects, besides Bitcoin, are considered securities because they involve a group in the middle, and the public anticipates profits based on that group. However, he noted that this is not the case with Bitcoin. 

## Crypto attorney's opinion on SEC's regulatory jurisdiction

Lawyer and policy lead at the Blockchain Association, Jake Chervinsky, argued with the comments by Gary Gensler on his authority over the cryptocurrency sector.

He [tweeted](https://twitter.com/jchervinsky/status/1629871537217044481?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1629871537217044481%7Ctwgr%5E91719ed73ca7c438481d7858aed2e4689c4c61c9%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fcointelegraph.com%2Fnews%2Fcrypto-lawyers-flame-gensler-over-claims-that-all-crypto-are-securities) on 26 February that Gensler's opinion is not legally binding, and the SEC must prove its jurisdiction over each token in court before regulating any of them. 

Lawyer Logan Bolinger also supported Chervinsky's view by [tweeting](https://twitter.com/TheWhyOfFI/status/1629649343627116545?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1629649343627116545%7Ctwgr%5E91719ed73ca7c438481d7858aed2e4689c4c61c9%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fcointelegraph.com%2Fnews%2Fcrypto-lawyers-flame-gensler-over-claims-that-all-crypto-are-securities) that Gensler's opinions on what is or isn't security are not legally conclusive, as the ultimate decision is up to the judges, not the SEC chairs.

Also, Jason Brett, the policy lead at the Bitcoin Policy Institute, tweeted that Gary Gensler's comments "shouldn't be celebrated, but feared" and that there are alternative ways to win than with a "regulatory moat".

## Enforcement challenges: Gabriel Shapiro

Gabriel Shapiro, the general counsel at investment firm Delphi Labs, took to [Twitter](https://twitter.com/lex_node/status/1629965092547620864?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1629965094430932993%7Ctwgr%5E91719ed73ca7c438481d7858aed2e4689c4c61c9%7Ctwcon%5Es2_&ref_url=https%3A%2F%2Fcointelegraph.com%2Fnews%2Fcrypto-lawyers-flame-gensler-over-claims-that-all-crypto-are-securities) to explain the difficulty the Securities and Exchange Commission would face in enforcing its rule on the [cryptocurrency](/news/article/what-is-future-of-cryptocurrency) industry. 

According to Shapiro, more than 12,305 tokens valued at around $663 billion are considered unregistered securities and thus illegal in the US. Per Chervinsky's comments, the SEC would have to file a lawsuit against each token creator for enforcement.

Shapiro outlined that the SEC has two main ways of handling cryptocurrencies: imposing fines on token creators and requiring registration or by imposing fines and directing that the created tokens be destroyed and delisted from exchanges. However, he noted that SEC registration is too expensive for most token creators, and there is no clear path for token registration.

Shapiro questioned the SEC's plan for the industry, given that registration appears unfeasible, leading to potentially huge fines, work stoppages, destruction of dev premines, and delisting from trading. He concluded that such a plan would require 12,305 lawsuits and put billions of American dollars at risk, leaving everyone wondering about the SEC's plan.


Gary Gensler in front of red image of crypto markets

Gary Gensler Crypto Claims Challenged

The IMF has shared its views on the need for crypto regulation during a meeting of senior government officials from around the world.

At the G20 Summit 2023 in Bengaluru, India, on 24-25 February 2023, all G20 Finance Ministers and Central Bank Governors met in the quest to encourage global economic stability and growth by facilitating cooperation and dialogue among G20 members (19 countries and the European Union).

Many topics were discussed, including a [modern international tax system](https://www.livemint.com/news/india/g20-aims-for-global-deal-on-mnc-taxing-rights-in-h1-2023-11677432143132.html). One topic which caught our attention was crypto regulation. Managing Director of the IMF (International Monetary Fund), Kristalina Georgieva, called for [greater private crypto regulation](/news/article/japanese-crypto-regulation-call-made), citing the risk of financial stability.

## IMF crypto regulation calls

Georgieva shared the IMF crypto regulation view at a press briefing during the G20 Summit 2023 in Bengaluru and stated that “private crypto assets are not money”.

She urged regulators to implement stricter measures, asserting that if regulation fails or is implemented too slowly, then "we should not take off the table banning those assets", adding they could create a "financial stability risk".

Georgieva underlined that the IMF, joined by the Financial Stability Board alongside the Bank for International Settlements, is devoted to establishing a foundation for regulating crypto assets not issued by central banks or governments.

Georgieva said, "We have to differentiate between central bank digital currencies (CBDCs) that are backed by the state and stablecoins, and crypto assets that are privately issued."

To summarise, according to Georgieva, regulating (or potentially banning) private cryptocurrencies is important, as they can pose significant risks to financial stability. The IMF, BIS, and FSB are working towards establishing a regulatory foundation for private crypto tokens.

This is not a new theme of discussion. Several [countries are actively working](/news/article/australia-crypto-regulation) towards a stringent regulatory environment for cryptocurrencies.

Following US President Joe Biden's executive order in March 2022, for example, arrangements towards greater crypto regulation were accommodated in the 2023 budget proposal (also released in March 2022). A framework was brought forward in September 2022 based on the executive order.

[The UK plans](/news/article/cryptocurrency-regulation-uk) to make digital assets a regulated financial instrument. The Swiss government has already inculcated a mature cryptocurrency framework into its regulatory system.

India has a strict crypto taxation framework, while the United Arab Emirates is assembling an authority focused solely on digital currencies. It is safe to say that cryptocurrency regulation is underway, whether you like it or not.


IMF Crypto Regulation Calls at G20 Summit 2023

A network of crypto investment scammers operating in Israel is targeting Australians, investigations have revealed. It is an organised network that works as a call centre. The scammers used social media ads, showing lucrative profits to target potential victims.
 
## Authorities uncovered Israel crypto scammers

Authorities from four countries were involved in an investigation to uncover a global network of [cryptocurrency scammers](/news/article/crypto-scams-failing). The countries involved include Germany, Serbia, Bulgaria, and Cyprus. 
 
![Screenshot 2023-02-24 at 09.32.58.png](https://s3.eu-west-2.amazonaws.com/prod-monitalks-media/Screenshot_2023_02_24_at_09_32_58_0494957298.png)

[Source](https://twitter.com/australian/status/1628877400556834816)

According to a The Australian report, the authorities raided four call centres in [Serbia](/news/article/do-kwon-hiding-in-serbia). In addition, they searched around 11 residential addresses, arrested 15 suspects, and officers recovered around $1.46 million worth of digital assets. The country is trying to strengthen its [crypto regulations](/news/article/australia-crypto-regulation). 

Further investigation revealed that the network was operating through Israel and the main targets for this network were Australians.
Inadequate investigations allowed scammers to target Aussies
The Australian report also disclosed that inadequate investigative measures for online fraud in the country have allowed scammers to target their citizens.

Australia is a wealthy country with no federal authority to prevent such scams, which gives an open chance of fraud and those intent on scamming victims.

IFW Global’s Senior Investigator, Mark Solomon, explained that, in general, Australians are "open-minded" and "friendly" people. That's why they are more open to online relationships. Hence, if bad actors use the right strategy, they can easily be persuaded.

Solomons also said Israeli crypto fraudsters spend the stolen money on their lavish lifestyles. He mentioned that these individuals are flying private jets, own fancy cars, and have investments in real estate.
Meanwhile, they maintain their lifestyle by "sucking" savings out of the Australian economy.

## Investment scams in Australia

In 2021, ACCC reported that citizens lost more than $2 billion through investment scams. According to [Scamwatch](https://www.scamwatch.gov.au/scam-statistics?scamid=all&date=2023), the country lost over $568.6 million through such scams. 


Israel Crypto Scamming Network Targets Aussies 

UK authorities have [carried out raids](https://www.fca.org.uk/news/press-releases/fca-takes-action-against-unregistered-crypto-atm-operators-leeds#:~:text=No%20UK%20firms%20or%20individuals,down%20or%20face%20enforcement%20action.) on multiple sites in and around Leeds, targeting illegally operated crypto ATMs.

The operation aimed to gather evidence of machines suspected of facilitating buying or converting traditional currencies into digital coins, such as Bitcoin. These machines were found in various locations around the city, and authorities have taken action to shut down their operations.

## FCA investigated illegal crypto ATM UK operations

The [UK's FCA](/news/article/uk-fca-explains-low-crypto-approval) is taking action to enforce its prior announcement that any [crypto ATMs](/news/article/crypto-atm-bitcoin-business) operating within the country without proper authorisation are doing so illegally.

The financial regulatory body has partnered with the West Yorkshire police to combat the illegal operation of cryptocurrency ATMs in Leeds, a city in northern England. The West Yorkshire police's cyber team has identified "several live crypto ATMs", although they did not disclose the exact number or location of these machines.

According to Coin ATM Radar data, there are currently 27 [Bitcoin](/news/article/visa-bitcoin-debit-card-review) ATMs installed across the UK. This operation marks the country's first crackdown on illegally operated crypto ATMs, highlighting the FCA's commitment to upholding regulatory compliance in the burgeoning cryptocurrency market.

According to Detective Sergeant Lindsey Brants of West Yorkshire police, warning letters were issued to the illegal operators instructing them to cease their operations. The letters also clarified that any violation of regulations would lead to an investigation under money-laundering regulations.

## Cryptocurrency companies need to be registered under FCA

According to the FCA, all companies that offer cryptocurrency-related services in the UK must be registered with them to comply with anti-money laundering and counter-terrorist financing regulations.

The FCA has cautioned explicitly that none of the registered crypto asset businesses has the authorisation to provide ATM services. As a result, any UK crypto ATMs currently operating are considered to be doing so illegally.


red image of bitcoin atm and policeman in uk

UK Crypto ATM Raided by Financial Regulator 

South Korea’s Financial Services Commission (FSC) has published a new set of guidelines requiring security firms and crypto industry players to self-regulate. Per the [new guidelines](https://www.fsc.go.kr/no010101/79386?srchCtgry=&curPage=&srchKey=&srchText=&srchBeginDt=&srchEndDt=) published Monday, February 13, 2022, the FSC seeks to bring the country's position on security tokens in line with other Asian nations.

## Freedom to self-regulate could boost asset innovation

According to Angela Ang, a former regulator at the Monetary Authority of Singapore and now a senior policy adviser at TRM Labs, a blockchain intelligence firm, South Korea was trying to align its definition of securities with countries like Hong Kong and Singapore. Coming at a time when traditional securities firms had allegedly developed cold feet about entering the market, Ang opines that the freedom to self-regulate could boost asset innovation in the country’s capital markets. 

Mooni Kim, an attorney working with local law firm Kim & Chang, commented that the fundamental standpoint of the new security law on tokens resembled the US version, but what remained now was how it would be applied.

Even before the ink dries, the announcement by FSC seems to have elicited mixed reactions in the country's crypto space. 

Industry players like [Shinhan Investment and Securities](https://open.shinhansec.com/new_eng/) have sounded a clarion call inviting interested parties to set up industry standards and educate investors on the potential benefits of token securities. 

## Debating 17 crypto-related laws

However, on the flip side, a crypto exchange executive who spoke on condition of anonymity because of his relationship with regulators expressed doubts about how the new development would boost the crypto industry. According to the official, it would have been prudent for FSC to begin by clearly defining the types of assets that qualify to be called securities instead before asking firms to self-regulate. 

South Korea is an integral player in the cryptocurrency industry, and the country’s national assembly is debating at least 17 crypto-related laws. The [proposed laws](https://www.koreatimes.co.kr/www/nation/2022/12/602_340645.html) range from guidelines on implementing reserve requirements at crypto exchanges to fair trade practices to create safeguards to [protect local crypto investors](/news/article/south-korea-crypto).           

[Regulators worldwide](/news/article/crypto-regulations) are burning the midnight oil to put in place frameworks to protect thirsty crypto investors, especially following a string of bankrupted crypto exchanges. The debate will culminate in a comprehensive [legal framework](https://www.news1.kr/articles/?4756185) called the Digital Asset Basic Act (DABA) that aims to introduce regulatory guidelines for the budding crypto industry. However, there is little chance that a piecemeal country-by-country approach will become effective without global coordination.


yellow image of regulation document and korean flag

Crypto Firms Can Self-Regulate in South Korea

The Australian Government is taking steps to strengthen its cryptocurrency regulation landscape by giving the regulator's digital asset team more tools and additional staffing to police the crypto sector in Australia.

The Australian Securities & Investments Commission (ASIC) said in a [statement](https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/media-releases/making-crypto-safer-consumers) on Friday that it had received tremendous support from the Australian Competition & Consumer Commission (ACCC) to boost its efforts in the wake of unfolding scams and a spate of demands for crypto ransoms.

## Additional Australian crypto regulation efforts

According to Australian Treasurer Jim Chalmers and his Assistant [Stephen Jones](https://twitter.com/StephenJonesMP/status/1621283526502125569), the additional Australia crypto regulation would focus primarily on crypto asset providers to ensure the Australian consumer is protected from unsustainable business models that leave them exposed.

Should the regulator identify companies marketing crypto offerings without the requisite credit or financial services license, the regulator proposes legal action. Additionally, ASIC will ensure companies appropriately disclose risks to consumers, while ACCC will intensify efforts to avert scams such as those involving crypto assets.

The statement said the Government had noted that "more scammers" had infiltrated the emerging asset class, and consumers had lost more than $221 million through crypto payment systems in 2022 alone. Noting that the Government's efforts would focus on the crypto asset subsector that isn't covered adequately by the financial services regulatory framework, Chalmers added that the watchdog would establish new obligations and operational standards for crypto service providers to protect customers.

## Encouraging consumer protection

Following the [FTX exchange's global disintegration](/news/article/ftx-bankrupt-who-to-blame), regulators have intensified scrutiny on the digital asset sub-sector. Blowups have scarred scores of consumers taking advantage of new digital products and services. FTX's Sam Bankman-Fried is already facing a suite of criminal charges, including fraud in the US, following the collapse of his exchange and sister trading house, Alameda Research. 

News about efforts to alter Australia crypto regulation by introducing “tighter safety nets” and amplifying the rules for the crypto market [filtered out](https://twitter.com/business/status/1602826711653023744) in December 2022 when the Government announced it would release a consultative paper in early 2023. According to the regulators, the report would lay the groundwork for a “new strategic plan” for payment systems and primarily work towards improving the regulation of cryptocurrency providers.

Australia will adopt a "multi-stage approach" involving three elements: strengthening enforcement, encouraging consumer protection, and creating a framework for its crypto mapping reform.

These actions aim to safeguard consumers, shield financial systems, and crack down on criminals. A consultation on the proposed custody and licensing framework will begin in "mid-2023".


Australia Crypto Regulation Stepped Up

In the wake of the fall of FTX, the government of the UK has planned major reforms in cryptocurrency regulation.

It plans to bring digital assets under mainstream financial laws. However, it has backtracked from the resolve of treating cryptocurrencies as stocks, insurance products, and shares.

On 31 January, the Treasury announced that it would publish several proposals to align traditional finance regulations with the crypto industry.

## Key changes in cryptocurrency regulation UK

The Treasury anticipates the security of the funds of crypto users. The regulatory proposals will likely assure customers of financial security even if the crypto firm experiences insolvency. 

Moreover, it would establish robust rules for token promotion to eliminate misleading information. 

On the other hand, the Treasury will ensure that the crypto firms strictly follow the new regulations. It will help remove bad actors from the industry from running scams like [pump and dump schemes](/news/article/how-to-spot-a-pump-and-dump). Regulators will also focus on data reporting to bring more clarity and better regularisation. 

The ministry believes that these changes will likely protect investors' rights. These reforms may also minimise the risk of potential scams.

## The need for regulations after the FTX fall

2022 was a testing year for cryptocurrency investors. The year's highlights were the [Terra-Luna debacle](/news/article/terra-luna-collapse) and the [bankruptcy of Celsius](/news/article/celsius-bankruptcy-judge-order) and other lenders. However, one event which really rattled the market was the collapse of Sam Bankman-Fried’s exchange, and many began to question, “[Is crypto dead after the FTX collapse?](/news/article/is-crypto-dead)". This crash restricted many investors from accessing their funds. Now, cryptocurrency regulation has become inevitable. 

The UK will be one of the first countries to amend its digital asset laws. According to a [BBC report](https://www.bbc.com/news/technology-64468617), Harriet Baldwin MP says that the crypto market is a wild west.

However, the market also sees many technological innovations, which may help the country's economy. Therefore, the Treasury plans to reform cryptocurrency regulation UK laws to ensure security for investors.

yellow image of regulation files and bitcoins

Cryptocurrency Regulation UK: Big Reform Coming

A disagreement has arisen between the Panama National Assembly and the government regarding a proposed crypto law.
In April, Panama legislators passed a legislative draft aimed at controlling cryptocurrencies, including [Bitcoin](/news/article/jim-cramer-says-ignore-bitcoin-hype), in the country. 

Nevertheless, President Cortizo warned a few weeks later that he would only sign it if it incorporated extra Anti-Money Laundering (AML) regulations.

On 26 January, Panamanian President Laurentino Cortizo referred the crypto law enacted last year to the Supreme Court for examination, asserting that the [crypto](/news/article/best-cryptos-to-buy-now) bill contradicts fundamental aspects of the constitution and cannot be implemented. 

## What is the controversy with the Panama crypto bill?

In September 2021, a Panama crypto bill was introduced to align the nation with the digital economy, blockchain technology, cryptocurrency, and the internet. According to the legislation, Panamanians are allowed to use [cryptocurrency](/news/article/cryptocurrency-books-guide), including but not limited to Bitcoin and Ethereum, as a substitute form of payment for any commercial or civil transaction. 

The government's innovation authority would also examine blockchain or distributed ledger technology for digitising identity.
The Financial Action Task Force, which aims to enhance financial transparency and prevent money laundering, proposed legislation permitting private and public usage of cryptocurrency assets.

The Panamanian National Assembly approved the bill on 28 April, 2022, with a vote of 38 in favour and none against. With this, Panama could soon become the third country in the world to treat cryptocurrencies on equal footing with fiat currency.

A definitive statement from the president's office stated that the provisions of articles 34 and 36 in the bill, which establish administrative structures within the government, infringe upon the state's separation of powers and therefore are invalid. After partially rejecting the legislation in June, President Cortizo also expressed that the approval process for the bill was inadequate.

At the time, the president [stated](https://www.presidencia.gob.pa/Noticias/Ejecutivo-remite-a-la-Corte-Suprema-proyecto-de-ley-que-regula-uso-de-criptomonedas) that further amendments were needed to the legislation to align it with the latest regulations. It is now up to the Supreme Court to determine whether to declare Bill No. 697 unenforceable or to give it the green light with modifications.


yellow image of panama with crypto bitcoins falling from sky

Panama crypto bill Awaits Supreme Court verdict


The UK financial regulatory body has received around 300 applications from cryptocurrency firms, but has [only approved 41 of them](https://cointelegraph.com/news/uk-s-fca-hints-at-why-its-given-only-15-of-crypto-firms-the-regulatory-nod). On 10 January, 2020, the Financial Conduct Authority (FCA) in the United Kingdom put new regulations targeting the cryptocurrency industry into effect.

These regulations are in place to oversee companies operating within this sector and to ensure that they comply with the same anti-money laundering and counter-terrorism financing regulations as traditional financial market companies.

The [UK's financial watchdog](/news/article/fca-crypto-regulation) has only approved 41 out of 300 crypto firm applications for regulatory approval despite plans to make the region a thriving crypto hub.

The UK FCA reported that of the 265 applications evaluated, only 15% were granted registration, 74% were withdrawn by the firms, and 11% were denied. Additionally, 35 applications are still pending review.

The authority did not specify the reasons for the rejection or withdrawal of these petitions. Still, it provided feedback on what is considered to be of "good and poor quality".

## Feedback from the UK's FCA regarding applications

The report stated that petitions deemed more complete included:

•	A comprehensive explanation of the company's business model.

•	The responsibilities of its partners and service providers.

•	The sources of liquidity.

•	Flow-of-funds diagrams.

•	A summary of the risk management policies and systems that have been implemented.


The report implies that some companies may have had applications denied if they could not demonstrate adequate [blockchain-compliance](/news/article/blockchain-use-cases) measures to monitor on-chain transactions.

The FCA also reinforced its stance against money laundering, requiring all companies to appoint a money laundering reporting officer who is actively involved in the application process.

The UK FCA has announced that it is working with other [regulatory agencies](/news/article/uk-crypto-exchange) globally, particularly with the US securities and commodities regulators, to enhance regulations where necessary. This is because many companies offer services on an international level. The FCA has also warned that failure to register before conducting business may lead to criminal charges.


yellow image of London with FCA logo overlayed

UK FCA Explains Low Crypto Firm Approval Rate

To assess the future of cryptocurrency, we need to start by looking back.

Bitcoin and Ethereum have dropped more than 50% since their all-time highs in late 2021. While there were some modest gains in late 2022, the cryptocurrency market remains relatively stagnant. Some analysts believe cryptocurrency values might fall considerably further before seeing a lasting rebound.

According to a senior market analyst at brokerage firm [OANDA](https://www.oanda.com/group/news-analysis/meet-analysts/edward-moya/), the crypto market might yet undergo one more significant sell-off before it begins to rebound, with [Bitcoin](https://time.com/nextadvisor/investing/cryptocurrency/bitcoin-price-predictions/) plummeting close to $10,000. According to crypto specialist Wendy O, Ethereum is at risk of falling as low as $750, a 50% drop from its current price.

"We're in a full-fledged bear market, not a bear cycle," says one analyst.

"Just because we're seeing some good pricing activity doesn't mean we're out of the woods," says another. "We're now trading around $1,500 for Ethereum, and to be very positive on Ethereum, it would need to see us break over $2,248. That is a 50% price increase."

Furthermore, crypto firms have laid off employees, halted withdrawals, and attempted to offset losses, increasing concerns about the industry's viability.

Terraform Labs went bankrupt in May, but the bear market has affected numerous companies since then. [Coinbase](https://blog.coinbase.com/a-message-from-coinbase-ceo-and-cofounder-brian-armstrong-578d76eedb12), the biggest cryptocurrency exchange in the United States, stated in June that it was laying off 18% of its workforce. This followed layoffs at other cryptocurrency firms, such as Gemini, BlockFi, and Crypto.com.

Due to "extreme market conditions", crypto bank Celsius unexpectedly ceased [withdrawals](https://blog.celsius.network/a-memo-to-the-celsius-community-59532a06ecc6) towards the end of 2022. The future of cryptocurrency hedge firm Three Arrows Capital was also thrown into doubt. When Bitcoin fell below $19,700, alarm bells rang. 

Crypto investors should invest between 2 and 5% of their net worth, according to Vrishin Subramaniam, founder and financial planner at [CapitalWe](https://www.capital-we.com/about).

"We often see 2 to 3% for most clientele who only watch crypto markets weekly", he added.

## Future of cryptocurrency regulation

Lawmakers in Washington DC and worldwide are debating how to create regulations and norms that would make cryptocurrencies safer for investors and less enticing to hackers.

Additional regulation may be the future of cryptocurrency. More regulation might lead to greater stability in the famously turbulent cryptocurrency sector. It could safeguard long-term investors, deter fraudulent conduct inside the crypto ecosystem, and give clear advice to allow enterprises to develop in the crypto economy, if there's a correct balance.

A recent Biden administration paper details potential laws that would increase regulation of the crypto sector. In recent months, US Fed Reserve Chairman Jerome Powell and [SEC](/news/article/sec-crypto-enforcement-warning) Chairman [Gary Gensler](/news/article/sec-crypto) have expressed concern about the absence of cryptocurrency regulation. 

Despite all the back-and-forth, a few critical themes on the issue of new US cryptocurrency legislation have emerged: preventing cryptocurrency crime and tax fraud, stablecoin regulation, and the possibility for investment vehicles such as crypto ETFs and other funds.

The decentralised nature of digital currencies, which, unlike traditional currencies, are not backed by any organisation or government authority, is a significant appeal for many crypto enthusiasts. However, regulatory guidelines can assist in protecting investors.

"As much as I admire the decentralisation and absence of government involvement, I am pleased they are paying attention since there are many scams with cryptocurrency", says Kiana Danial, author of Cryptocurrency Investing for Dummies.

One potential provision would broaden the definition of a brokerage firm to include entities that handle digital asset trading, such as cryptocurrency exchanges. This move would imply higher tax reporting duty to assist the IRS in tracking crypto tax evasion. 

Furthermore, [Gensler has stated](https://www.sec.gov/news/public-statement/gensler-aspen-security-forum-2021-08-03) that stronger legislation is needed to help avoid future ransomware attacks like the one that took down the [Colonial Pipeline](https://www.nytimes.com/2021/05/08/us/politics/cyberattack-colonial-pipeline.html) in May 2021. The pipeline assault was one of several high-profile examples of hackers demanding [Bitcoin ransoms](https://www.npr.org/2021/06/10/1004874311/how-bitcoin-has-fueled-ransomware-attacks).

While Gensler did not specify how the SEC planned to assist in prosecuting these offences, he did state that the agency will continue to use its full authority. The SEC will continue to push its authority as far as it can, Gensler said at the [Aspen Security Forum](https://www.aspensecurityforum.org/) in Colorado. According to a recent US Treasury assessment, cryptocurrency "poses a serious detection difficulty by promoting illicit conduct, including tax evasion".

## Future of cryptocurrency: Stablecoin regulations

The ease with which stablecoins may be exchanged, along with their stable value, has figures like Yellen and Gensler concerned that they pose threats to the financial system and economy. As a result, they must regulate.

Stablecoins, which act as a bridge between cryptos on various blockchains, might make it easier and cheaper to perform trades on an exchange without using fiat currency. Stablecoins are tied to other assets, often less volatile than cryptocurrencies, such as fiat currency or precious metals, and may price them similarly. 

Therefore, the coins are more "stable" than other cryptos, whose values fluctuate with the markets.

Assisting in reducing or eliminating potential transaction costs since certain exchanges prefer trading from stablecoins to other cryptos over trades from a dollar-based bank account. Many exchanges, like Coinbase, do not charge fees when converting US dollars for USD Coins, which are used to purchase other cryptocurrencies.

According to a [recent study](https://home.treasury.gov/news/press-releases/jy0454) from the Federal Deposit Insurance Corporation, the Working Group on Financial Markets, and the Office of the Comptroller of the Currency, some stablecoins' purpose is to circumvent money-laundering laws or even finance rogue states or terrorists. This has grown even more prominent in policymakers' minds in the aftermath of Russia's invasion of Ukraine, with the possibility that Russia may utilise cryptocurrency to avoid sanctions.

However, there are fears that stablecoins would weaken established US banking institutions, causing financial system difficulties. In other words, the more stablecoins used by investors, the more likely any problems with them would damage the economy. According to White, systemic risks frighten regulators the more, which is why stablecoins are at the tip of the regulatory spear. For example, if you purchased $1,000 worth of stablecoins to decrease or eliminate costs on your cryptocurrency trades, but the stablecoin collapsed before you could utilise it, you'd be down $1,000.


blue image of man trading on ipad in futuristic landscape

What is the future of cryptocurrency?

The cryptocurrency market has experienced massive growth and sharp declines in the past two years. Total crypto market capitalization rose by 283% from $782 billion on 1 January, 2021 to $3 trillion on 10 November, 2021. Since that day, the market cap of the entire crypto market has plunged by 72% to around $815 billion on 9 December, 2022.

While the massive growth was attributed to a significant rise in institutional adoption of cryptocurrencies as a method of payment and an investment instrument, most of the decline has been attributed to waning interests by crypto enthusiasts, global macroeconomic instability, and the collapse of popular crypto projects.

In December 2017, when BTC reached a peak of $20,000 (resulting in a bear market through 2018 and 2019), many analysts predicted the end of Bitcoin and the entire decentralized finance market. Most market analysts affirmed their positions on the future of crypto in the next 5 years when the financial markets (centralized and decentralized) plummeted to all-time lows during the peak of the coronavirus pandemic in March and April 2020. 

Despite their forecasts, BTC and [Ethereum](/news/article/neo-network-china-ethereum) (ETH) weathered the storm and exchanged hands for more than $60,000 and $4,000, respectively, in November 2021.

Five years on from BTCs peak in 2017, some analysts believe crypto could rise to the moon and recover. Others believe the crypto market could stabilize, while the naysayers think the next five years look like a bad period for the future of crypto, which could see it crash and burn. Skeptics should know that the era where demand and supply determined the price of cryptocurrencies is over. Whether crypto will boom or go bust in 2023 and beyond depends on regulation in the United States and abroad, the rise in the demand for crypto-tied exchange-traded funds (ETFs), and the mass adoption of cryptocurrency as a method of payment and an investment asset by individuals and mainstream companies.  

## Government regulation could brighten the future of crypto in the next 5 years

Despite the potential of decentralized lending platforms, which give users above-average minimum annual percentage yields (APYs) of 5%, billions of people have stayed away from many decentralized applications (Dapps).

Aside from the two most popular cryptocurrencies in the form of BTC and ETH, other digital assets like Shiba Inu (SHIB), Dogecoin (DOGE), and SafeMoon (SAFEMOON) have brought more than 10,000% gains to investors in a short period. Despite the quick earnings in less than one year, billions of potential investors have stayed away from investing in cryptocurrencies and using Dapps to earn a consistent passive income because they are unregulated by institutions they trust.

According to a June 2022 study by [The Ascent](https://www.fool.com/the-ascent/research/study-americans-cryptocurrency/), which is part of the Motley Fool, around 46.5 million Americans who have never engaged with any cryptocurrency said they are considering becoming crypto owners in 2023. 

The same study said that more than half of Americans surveyed who have never owned cryptocurrency said they would consider purchasing the new asset class if they could store their coins and tokens in their primary bank.

More importantly, around 50% of Americans believe crypto should be regulated.

The United Kingdom’s top regulator, the [Financial Conduct Authority](/news/article/ftx-uk-warning) (FCA), revealed its [crypto asset consumer research for 2021](https://www.fca.org.uk/publications/research/research-note-cryptoasset-consumer-research-2021), and findings showed the need for regulation. 

Many residents said they have heard about stablecoins, especially the United States Dollar Tether (USDT) and the United States Dollar Coin (USDC). Stablecoins are cryptocurrencies pegged to fiat currencies such as the USD, Euro (EUR), or Great Britain Pound (GBP). 

Around 59% of people surveyed said they stored their digital assets on the cryptocurrency exchange from which they purchased. About 24% made it known that they have zoomed into self-custody and, as a result, store their coins in digital [wallets](/news/article/tony-fadell-launches-crypto-wallet). Some pointed out that they have opted for hardware wallets due to their traits of being offline and not in the reach of cybercriminals who spread malware to compromise wallets and make off with billions of dollars in stolen crypto.

Bitcoin was the most popular coin, followed by Ethereum, Litecoin (LTC), Ripple (XRP), and Bitcoin Cash (BCH).
The FCA’s concern was that ownership had risen significantly from 1.9 million in 2020 to 2.3 million in 2021. 

According to the [FCA](/news/article/uk-crypto-license), many investors mistakenly believe that the cryptocurrencies they engage with have regulatory protection, which they don't. Due to a lack of regulation, about 43% of people surveyed said they were discouraged from buying crypto due to the consumer warnings on the FCA's website. Mistaken beliefs and a lack of understanding about an industry that continues to experience billions of dollars in losses are the reasons why crypto should be regulated.

## The future of crypto in the next 5 years

Chris Oldfield, the co-founder of Fitburn, told Moni Talks:
"Predicting the future of crypto in the next 5 years is hardly possible. However, we can look at it from different perspectives, investors, companies, and banks. From an investor's perspective, crypto is the only way to own an uncontrollable asset in many countries around the world.

This applies to both buying and selling. Investors still have the opportunity to get in early enough to position themselves well and earn high returns over time, contrary to previous asset levels.

"This also applies to day traders, who find a very young and strongly fluctuating market. Companies can quickly and easily digitize their business through the smart implementation of blockchain technology and build a fiat-independent trading business through cryptocurrencies with various partners worldwide."

Without regulation, millions continue to pour billions of dollars into the crypto industry. Regulations will give investors protection, which could motivate new investors to get involved with the new asset class and keep it alive.

"In general, I am very optimistic about the future of crypto, although we should keep an eye on regulations imposed by countries. Especially macroeconomically, crypto is volatile and can quickly be shaken by new laws and regulations. All in all, it will still take some time and some ups and downs until cryptocurrencies shape our everyday lives," Oldfield added.

Aside from government regulation, other industry-wide factors could influence the future of cryptocurrency in the next 5 years. 

## The impact of alternative blockchains is essential to the future of crypto in the next 5 years

The Proof-of-Work (PoW) blockchain had environmental concerns due to its high carbon emissions. Proof of the impact of PoW chains can be attributed to the use of the most popular cryptocurrency, Bitcoin.

Due to the power needed by BTC, it has been estimated that the first cryptocurrency creates more climate damage than global beef production.

Such environmental concern is why [Tesla](https://www.cnbc.com/2021/02/08/tesla-buys-1point5-billion-in-bitcoin.html#:~:text=Tesla%20announced%20Monday%20it%20has,maximize%20returns%20on%20our%20cash.%E2%80%9D) and Wikipedia broke their relationships with BTC after announcing the cryptocurrency as a payment method earlier.

Stakeholders of the crypto industry have not overlooked the adverse effects of PoW. This is why many developers have jumped into Proof-of-Stake (PoS) blockchains.

Ethereum has embraced PoS in its transition from PoW in September 2022 and other blockchains, such as Solana, Avalanche, TRON, Algorand, and Binance Smart Chain. Its introduction has made it easy for networks to process thousands of transactions every second while maintaining security.

PoS blockchains do not rely on application-specific integrated circuits (ASICs) but instead rely on Central Processing Units (CPUs) and Graphic Processing Units (GPUs) powering desktops and laptops to validate transactions.

This has led to a substantial reduction in high energy consumption, with most PoS chains tagging themselves as zero-carbon technologies.

Many reports point to the fact that an improvement in transaction validation could be a primary factor in the future of crypto in the next 5 years. This is because decentralized finance applications and non-fungible tokens (NFT) can be used with their transactions processed without any security problems or network congestion.

"As a blockchain is a great tool for transactions traceability and transparency, and smart contracts play an important and reliable role in securing transactions in a very cost-efficient way, eliminating mediators, most likely that crypto will replace a huge part of the traditional fiat transactions.

"On the other hand, the crypto ecosystem is moving forward, developing amazing monitoring and tracing tools that enable the regulators and community to identify suspicious transactions, wallets, and projects. This will lead to purity and maturity to minimize scams, hence big adoption in various businesses," Mohammed AlKaff AlHashmi, co-founder and Chief Brand Officer (CBO) at Islamic Coin, told MoniTalks.

## Broader institutional adoption could create a great path for crypto

The market capitalization of crypto reached a peak of $3 trillion because of institutional adoption. Three of the institutions that took the market to such heights were Tesla Inc., Grayscale, and MicroStrategy. 

In February 2021, Tesla announced that it had purchased $1.5 billion in BTC. Bitcoin reached a then peak of [$58,330.57](https://coinmarketcap.com/currencies/bitcoin/historical-data/) on the back of the purchase on 21 February, 2021.

As of September 2022, MicroStrategy’s total BTC holdings were 130,000, up 42% from March 2021’s total holdings of 91,064 BTC. Co-founder of MicroStrategy Michel Saylor has been a huge proponent of BTC since his firm began investing in BTC as far back as August 2020, when 21,454 BTC were purchased for $250 million. 

[Grayscale Investments](https://grayscale.com/) is the largest digital asset management company in the world. The firm launched Grayscale Bitcoin Trust in September 2013 and followed this up with Grayscale Ethereum Trust in December 2017. Due to the success of BTC and ETH Trusts, Grayscale followed up with Trusts for [Filecoin](https://grayscale.com/products/grayscale-filecoin-trust/) in March 2021, [Solana](https://grayscale.com/products/grayscale-solana-trust/) in November 2021, [Decentraland](https://grayscale.com/products/grayscale-decentraland-trust/) in February 2021, [Chainlink](https://grayscale.com/products/grayscale-chainlink-trust/) in February 2021, [Livepeer](https://grayscale.com/products/grayscale-livepeer-trust/) in March 2021, and [Basic Attention Token](https://grayscale.com/products/grayscale-basic-attention-token-trust/) in February 2021. 

Despite the plunge in market prices, Grayscale remains unshaken and continues to maintain the Trusts.

A repeat of the investments made by these companies in the future could keep the crypto industry alive for many years. 
Aside from making direct investments in crypto, the adoption of crypto trading by mainstream companies can also bode well for the future of crypto. 

On 1 November 2022, [MoneyGram](https://ir.moneygram.com/news-releases/news-release-details/moneygram-introduces-new-crypto-service-enabling-customers-buy), a cross-border payment company, announced the launch of what it called a new crypto service that enables its customers to buy, hold, and sell cryptocurrency via its MoneyGram App. This saw MoneyGram join other financial services firms like PayPal Inc. and Skrill (from PaySafe Group, which also includes Neteller) in allowing their customers to buy, store, and sell cryptocurrencies on its platform. 

MoneyGram is one of the biggest names in cross-border payments. If more companies join in offering crypto services to millions of their customers, this could positively impact the fortunes of crypto in the future.

## Acceptance of ETF vital to the future of crypto

In centralized finance, an exchange-traded fund (ETF) comprises a basket of securities bought and sold via a stock exchange or a brokerage firm. Since BTC is the first and most popular cryptocurrency, ETFs backed by the cryptocurrency have been trending over the past few years.

 Bitcoin ETFs are pools of BTC-related assets offered on trading exchanges by brokerages to be traded as ETFs. The purpose of BTC ETFs and other crypto-backed EFTs that will be joining the industry is to give retail investors and other investors who are not comfortable with investing in cryptocurrencies access to digital assets without actually owning them. 

Some of the best Bitcoin ETFs as of December 2022 are ProShares Bitcoin Strategy ETF (BITO), Valkyrie Bitcoin Strategy ETF (BTF), VanEck Bitcoin Strategy ETF (XBTF), AdvisorShares Managed Bitcoin Strategy ETF (CRYP), Global X Blockchain & Bitcoin Strategy ETF (BITS), and ProShares Short Bitcoin ETF (BITI). 

## Crypto investor and community support essential

Despite the need for regulation, the use of PoS blockchains, mainstream adoption by major corporations, and crypto-backed ETFs, the future of crypto in the next 5 years still depends on crypto investors and the crypto community.

Without the community, the crypto industry wouldn’t have survived into its 13th year. While many naysayers have predicted doom for the crypto sector, some industry experts remain optimistic about the future of crypto. One of them is Slava Demchuk, co-founder of AMLBot, founder of the AMLSafe app, and CEO of PureFi. 

He told MoniTalks: "The cryptocurrency ecosystem is developing rapidly, with growing investor interest and increasing transparency of crypto issuers and intermediaries. 

The convenience, speed, and security of cryptocurrency payments will continue to improve gradually. Due to the formation of a legal framework, comprehensive regulation, and oversight, cryptocurrencies will have a clear legal status, and market participants will have the right to legally conduct business and protect their interests. Most likely, all these developments will contribute to the spread of payments in cryptocurrencies, and their share in people's savings and investment portfolios will increase. 

Exchanges will de facto turn into brokers and send information about their trading activities to the tax authorities at the place of the user's tax residency. 

Cryptocurrency will get its own tax status and method of accounting and valuation. Higher transparency of the cryptosphere will lead to the situation when it will be almost impossible to use dirty crypto anywhere."

Despite the positives, crypto still faces an uncertain future and needs to tackle its cybercriminals' problems as well as find an answer to its emerging competitor in central bank digital currencies (CBDCs). 

## The future of crypto in the next 5 years looks uncertain

While many believe crypto is the future of money, the emergence of national digital currencies could end this narrative. 

China banned banks from interacting with cryptocurrencies in 2013 and followed this up with the banning of initial coin offerings (a way of raising funds to support crypto projects just like what is done in the stock market called initial public offering) in 2017. The country’s attention turned to crypto mining in 2019, and in May 2021, China banned crypto and mining. 

As a major power of the 21st century, China took the lead by launching the digital Yuan (e-CNY) in 2021, and millions of Chinese are using the national digital currency. 

According to the People’s Bank of China (PBOC), the e-CNY app had around 261 million users as of the end of 2021 and has been involved in more than 360 million transactions worth over $14 billion. The digital Yuan is available to residents in 23 cities across the country. 

China’s lead in CBDC has been embraced by other countries such as The Bahamas and Sweden. The [Dominican Republic](https://newsdirect.com/news/dominica-selects-tron-as-its-national-blockchain-to-issue-the-countrys-official-coin-607432614) announced in October 2022 that it had selected TRON as its national blockchain as it plans to issue its first official coin, Dominica Coin (DMC).

In November 2022, the Federal Reserve of the state of New York launched a digital dollar pilot program with nine financial institutions, which included Mastercard, Wells Fargo, and Citibank, to test the utility of a digital dollar using distributed ledger technology (DLT). Millions of Americans and billions worldwide are also concerned about crypto scams.

If cybercriminals continue to have their way due to a lack of regulation, crypto could crash and burn in the future.



bue image of man walking in futureistic city with bitcoins falling from sky

The Future of Crypto in the Next 5 Years 

The global crypto crisis in recent months has sent shockwaves throughout various industries - especially the financial sector. 

More often than not, the infrastructure of crypto technology itself was blamed. However, Japanese crypto and finance experts have suggested otherwise, putting pressure on global financial regulators to monitor the industry properly.

One of the [major statements](https://www.bnnbloomberg.ca/japan-pushes-global-counterparts-to-regulate-crypto-like-banks-1.1870854) came from the deputy director-general at the Financial Services Agency's Strategy Development and Management Bureau, Mamoru Yanase. He believes that crypto should be regulated just like any other financial institution on a global level.

"What's brought about the latest scandal isn't crypto technology itself," said Yanase, with regard to FTX's failure in the US and Japanese crypto markets. "It is loose governance, lax internal controls, and the absence of regulation and supervision."

Financial experts from the US are mainly of the opposing opinion, as they consider crypto an inadequate technology - one that's not sustainable for the long term. However, the Japanese crypto viewpoint considers the industry to be of immense significance - only lacking the vigilant and proactive regulation that such a large industry requires.

This entire discussion is based on the [FTX case](/news/article/ftx-bankrupt-who-to-blame) that's been going on since November. The fallout from FTX sent the entire crypto industry into an unforeseen frenzy. And, looking back at it now, it was probably the lack of supervision and control that led to the whole mess in the first place.

## Sale of FTX’s Japanese crypto branch imminent

Mamoru Yanase also touched upon the sale of FTX Japan, as the crypto company went bankrupt last year. He mentioned how the Financial Services Agency has helped to "segregate client's assets" from FTX Japan's account to ensure their safety. 

Furthermore, he added that clients would be able to withdraw their assets from their FTX Japanese crypto accounts as early as February.

As per a report from [Cointelegraph](https://cointelegraph.com/news/japanese-regulators-want-crypto-treated-like-traditional-banks) based on a recent court filing in the US, there were 41 parties interested in buying out FTX Japan.

It only makes sense to put in place controls and regulations for crypto transactions, like those for the banking sector globally.

This must be done to avoid future issues like money laundering and stealing of assets. Otherwise, a proper revival of the crypto industry seems far off from happening any time soon - at least in the eyes of Yanase.


japan backgound in yellow with Mamoru Yanase

Japanese Crypto Regulation Call Made

Entering 'is crypto regulated' as a search term on Google returns 15.9 million results in 0.50 seconds. Entering the same phrase, is crypto regulated, into Yahoo brought forth thousands of search results.

The millions of results indicate that skeptics of the emerging industry are interested in what regulatory bodies worldwide have done and continue to do to ensure the safety of investor money.

While some regulatory agencies have made efforts, the lows and highs of the crypto finance sector have made it difficult for regulators to design a comprehensive global regulatory framework for this booming industry.

In the beginning, crypto projects such as Namecoin (NMC), Peercoin (PPC), Novacoin (NVC), Terracoin (TRC), Devcoin (DVC), and WorldCoin (WDC) were low-cap digital assets (had less than $2 billion as market capitalization) with less useful underlying infrastructure. Innovative technologies back current projects.

This is why projects such as Solana (SOL), Cardano (ADA), Ripple (XRP), Ethereum (ETH), TRON (TRX), Polkadot (DOT), Cosmos (ATOM), Algorand (ALGO), and Flow (FLOW) have market caps that range in the billions of dollars. 

As of the end of November 2022, the market capitalization of Bitcoin (BTC) alone was bigger than that of Samsung, Bank of America, Coca-Cola, PepsiCo, Oracle, Alibaba, Shell, Toyota, McDonald, Nike, and Morgan Stanley.

During the peak of the markets in November 2021, BTC's market cap was [higher](https://companiesmarketcap.com/) than Walmart and Visa and competed with Alphabet (Google), Microsoft, and Apple in terms of market value. 

The boom in crypto, which saw BTC and Ethereum rise to all-time highs (ATH) of [$68,789.63](https://coinmarketcap.com/currencies/bitcoin/) and [$4,891.70](https://coinmarketcap.com/currencies/ethereum/), benefitted a particular group in the decentralized finance (DeFi) sector. That group was cryptocurrency exchanges. 

Binance, FTX, Mandala Exchange, Upbit, MEXC, Coinbase, Bitrue, OKX, Gate.io, Crypto.com, Huobi, and CoinTiger saw record revenue generation due to the fear of mission out (FOMO) taking over the market in 2021. FOMO saw billions of dollars poured into the crypto industry, bringing at least 1,000% gains for several unsophisticated traders and investors (those that lack crypto knowledge and do not conduct fundamental or technical analysis before making decisions).

Blockchain technology and cryptocurrency were on a high throughout 2021, and another area, called DeFi, started attracting a new audience. The new audience was hard-working individuals fed up with the infinitesimal interest rates offered by traditional finance (TradFi).

While the real interest rate in the US was 2.3% in 2020, according to the [World Bank](https://data.worldbank.org/indicator/FR.INR.RINR?locations=US), the interest rate fell below zero in 2021. This could not be compared to the minimum annual percentage yield (APY) of 5% offered by DeFi lending platforms and certain exchanges through staking services. The boom in crypto lending led to the creation of several now-insolvent firms, such as Voyager and Celsius.

Millions of people have lost more than a trillion dollars since November 2021, with the current crypto market capitalization below $1 trillion a year later. Much blame has been placed on cryptocurrency exchanges and crypto lending firms. While these firms bear the lion's share of the responsibility, many potential traders ask 'is crypto regulated' in their jurisdiction so that they will not fall victim to investment losses due to the rapid collapse of crypto companies.

## Is crypto regulated by SEC in the United States?

Cryptocurrencies are found on a blockchain and can be stored in crypto wallets. They are primarily traded on a cryptocurrency exchange, of which there are two types: centralized exchanges (CEXs) and decentralized exchanges (DEXs).

The best way to differentiate them is compliance with rules and regulations. While CEXs comply with rules such as Know Your Customer (KYC), which helps prevent money laundering and combat terrorism financing, DEXs thrive on anonymity. They do not require users to submit any documents for review.

Despite this, CEXs record more volume than DEXs. A great example can be attributed to Binance. It is the largest CEX by volume, seeing more liquidity in the first two days of October (around [$66 billion](https://nomics.com/exchanges/binance/history)) than Uniswap, the largest DEX by volume, which recorded around [$42 billion](https://dune.com/queries/1847/3261) throughout the month. Such statistics by CEXs have made them the go-to platforms for several traders. 

The collapse of FTX in November, and the reduction of staff by others such as Crypto.com, Coinbase, BlockFi, Bybit, and Gemini in previous months, have led to calls for crypto regulation. 

Many industry experts have asked why the top regulator in the US, the Securities and Exchange Commission (SEC), maintains focus on the "cryptocurrency securities" relationship, with an eye on its case with Ripple, instead of drawing up a comprehensive regulatory framework that will answer the question is crypto regulated in America. 

In the US, Coinbase is the biggest exchange by trading volume and is a centralized exchange. The exchange has the necessary licenses for operations in more than 40 US states.

Despite this, Coinbase is not insured by FDIC, the Federal Deposit Insurance Corporation. The FDIC is an independent governing body created by US Congress in 1933 to maintain public confidence and stability in the country's financial system.

If the exchange with the most customers in the country is not insured due to "cryptocurrency" not being subject to the protections of the FDIC or Securities Investor Protection Corporation (SIPC), many people may lose hope in the crypto industry due to a lack of regulation.

Blame continues to be placed on the SEC, but the Commodity Futures Trading Commission (CFTC) has also been drawn into the 'is crypto regulated' trend.

In 2015, the [CFTC](https://www.cftc.gov/digitalassets/index.htm) said it classifies virtual currencies like BTC as commodities under the Commodity Exchange Act (CEA). In September 2022, SEC Chair [Gary Gensler](https://www.investopedia.com/gensler-on-crypto-6544288#:~:text=U.S.%20Securities%20and%20Exchange%20Commission%20Chair%20Gary%20Gensler%20said%20most,and%20other%20crypto%2Drelated%20issues.) affirmed his stance on classifying cryptocurrencies as securities. 

This is the reason why current CFTC Commissioner Summer K. Mersinger told crypto news portal [Coindesk](https://www.coindesk.com/policy/2022/11/28/regulating-crypto-not-a-one-agency-solution-cftc-commissioner-says/) on 28 November that crypto regulation is not a "one-agency solution". She admitted that the CFTC would need to work with the SEC in regulating the emerging sector. While she did not give a clear view about how the two agencies could regulate the industry, she assured stakeholders that the agencies would need to liaison with global regulators before regulations could be implemented.

Despite the delays in crypto regulation due to unclear CFTC crypto and SEC cryptocurrency rules, Chief Executive Officer (CEO) of Stifel Ron Kruszewski has called on the SEC to extend the customer protection rule to the crypto sector.

The Customer Protection Rule (Rule 15c3-3) was adopted in 1972 by the SEC in response to a congressional directive to create rules around the acceptance, custody, and use of customer securities. The rule requires broker-dealers to protect the securities that customers leave in their custody. It also ensures that, at any time, brokerage clients can withdraw assets, and a brokerage has to work to uphold it.

With such a rule in place, customers of bankrupt exchanges like FTX, and lending firms such as Voyager and Celsius, would have been protected from huge losses suffered from the halting of deposits and withdrawals.

## Is crypto regulated by the Europe Union?

In Europe, Germany leads the rest of the countries as the world's most friendly crypto nation. 

Unfortunately, the Financial Conduct Authority's (FCA) stiff stance on the highly-volatile industry has made the United Kingdom (UK) less of a crypto-friendly country.
 
In March 2022, the FCA warned residents of [illegal crypto ATMs](https://www.fca.org.uk/news/news-stories/warning-illegal-crypto-atms-operating-uk) operating in the country. In trying to limit UK residents’ exposure to virtual currencies, the agency warned ATM owners to shut their operations or face strong action by law enforcement. The [FCA](https://www.fca.org.uk/news/press-releases/fca-clamps-down-marketing-high-risk-investments-consumers) followed this by clamping down on the marketing of high-risk investments to consumers in August 2022.

While a cryptocurrency exchange such as Binance has had a hard time dealing with the FCA, Chanpeng Zhao’s innovation has received the regulatory nod in [France](https://techcrunch.com/2022/05/04/binance-france-regulatory-approval-europe/), [Italy](https://www.binance.com/en/blog/ecosystem/binance-obtains-regulatory-approval-in-italy-421499824684903920), [Cyprus](https://coingape.com/just-in-binance-expands-european-stronghold-with-new-license/#:~:text=Binance%20Gets%20License%20in%20Cyprus&text=The%20new%20license%20allows%20the,(AML%2FCTF)%20rules.), and [Kazakhstan](https://www.binance.com/en/news/flash/7226912). This shows that CEXs with the right whitepapers, assets, and Proof of Reserves (PoR) can weather the storm and be accepted by other European countries with different due diligent processes.

With that said, the [Markets in Crypto-Assets (MiCA)](https://www.europarl.europa.eu/thinktank/en/document/EPRS_BRI(2022)739221), first proposed by the European Commission (EU) in August 2020 and scheduled to take full effect in 2024, will establish agreed rules for all crypto assets at the EU level. This will bring some legal certainty for crypto assets not provided by existing legislation within the EU.

## Is crypto regulated in the Asian Pacific region?

In Asia, China has banned cryptocurrency use in all of its forms and has instead created and popularized the use of the country's national digital currency called the digital Yuan (e-CNY).

In trying to limit the use of cryptocurrency as a transactional currency and investment asset, authorities in [India](https://www.internationaltaxreview.com/article/2aubz4iwirgo9jk0avwg0/this-week-in-tax-indias-crypto-tax-may-kill-the-industry#:~:text=The%20Indian%20government%20has%20imposed,into%20effect%20from%20July%202022.) have imposed a 30% tax on capital gains accrued from crypto transactions in July 2022. 

Unlike China, crypto is legal in Japan. One of the best ways Japan’s [Financial Services Agency](https://complyadvantage.com/insights/japan-to-introduce-travel-rule-for-crypto-to-track-illegal-transfers/) (FSA) regulates crypto is by introducing a travel rule for crypto to track illegal transfers. The Travel Rule, scheduled to take effect in May 2023, will help reduce money laundering using cryptocurrencies.

Aside from the FSA, the [MAS (Monetary Authority of Singapore)](https://coingeek.com/singapore-rejects-over-100-licensing-applications-from-digital-currency-firms/) is one of Asia's top players and has a rigorous process regarding issuing virtual asset service provider (VASP) licenses. Despite receiving more than 170 applications for licenses, MAS has granted one to less than 10% of applicants, with many crypto companies still waiting for a positive outcome.

Aside from China, India, Japan, and Singapore, it is not uncommon to come across the question, 'is crypto regulated?' in [Australia](https://www.globallegalinsights.com/practice-areas/blockchain-laws-and-regulations/australia#:~:text=Australian%20law%20does%20not%20equate,perceived%20use%20for%20wholesale%20CBDCs.). As of January 2022, there is no legislation to tackle cryptocurrency as a discrete area of law in Australia. That said, cryptocurrencies can be captured within the existing rules of Australia. 

Cryptocurrency is not the only area in the crypto stratosphere without legislation in the country; blockchain and other distributed ledger technology (DLT) do not have a regulatory framework in Australia.

Despite their impact on centralized finance, Australia does not regard cryptocurrency as money. This is in direct contrast to the notion held by some countries that digital currencies can be equated with fiat currencies. While China has taken the lead in the creation of central bank digital currencies (CBDCs), Australia does not have plans to issue a retail CBDC in the near future.  

## Is crypto regulated in Africa?

Crypto regulation in Africa is largely non-existent. Despite the majority of Africans using crypto as a hedge against inflation, most central banks and local regulatory bodies do not have cryptocurrency laws.

The only African country that has given the green light for the use of crypto so far is the Central African Republic (CAR). 

The Central African country followed El Salvador to become the second country across the globe to legalize BTC as a legal tender. Much of this has been done to aid international trade due to African countries' consistently depreciating local currencies. 

African countries have not gone unchecked concerning cryptocurrency regulations. [The International Monetary Fund (IMF)](https://www.imf.org/en/Blogs/Articles/2022/11/22/africas-growing-crypto-market-needs-better-regulations) announced in November 2022 that the growing crypto market within the region needs better regulation. 

According to the IMF, the collapse of FTX and the tanking of the market should prompt central banks in African countries to set up cryptocurrency laws so that consumers can be protected from high volatility. The financial body said that the widespread acceptance and use of crypto could create macroeconomic instability within the region.

## Crypto regulation needed more than ever

While many expect the crypto finance industry to remain highly decentralized so that citizens can control all aspects of their financial lives, unending cases of fraud and scams have shed new light on regulations. Some industry experts have shared their views about crypto regulation. 

"The collapse of the FTX Derivatives Exchange has made the perfect case for regulators. Now they can claim that the emerging crypto ecosystem, despite its revolutionary propositions, needs urgent and comprehensive regulation. In reality, regulators worldwide have often maintained this stance, and crypto proponents are now forced to support the notion en mass.

“FTX deceived everyone, and despite the facade of good health that the company put up, many shady and unethical activities were going on in the background. 

Reporting and accountability standards amongst C-Suite executives are among the key regulatory frameworks that will need to be designed for crypto firms. However, it's more important than ever for the crypto community to point out that, even if FTX dealt with crypto, they were not crypto. They never were, nor is any one centralized company that offers it to their customers. Cryptocurrency exchanges are, if anything, more akin to banks than to cryptocurrencies or even Decentralized Finance.

“If you were to ask me, ‘should the FTX collapse increase centralized institutions' regulation?’ then the answer would be an unequivocal yes. These institutions need regulation, not the sovereign tools and technologies enabling users to eventually surpass them altogether,” Brian Pasfield, CTO of Fringe Finance, told [Moni Talks](/news).
Slava Demchuk, Co-founder of AMLBot, Founder of the AMLSafe app, and CEO of PureFi, also shed light on the current state of crypto regulation.

“The collapse of the FTX exchange will increase the necessity for cryptocurrency regulation. We strongly believe that this situation has become similar to the Subprime mortgage crisis in 2008. It would be the same tipping point for the crypto industry. Such a market condition will inevitably lead to stricter regulation for CEXs and VASPs in general.

“It will include tighter control over exchanges' liquidity, stronger executive responsibility, etc. Conventional crypto-enthusiasts would not suffer from more severe regulation because they are already operating under specifically defined market rules. Moreover, we always used to say, crypto regulation follows the classical financial market, so the collapse of the exchange is just a reason for it.”

## Conclusion

Despite the numerous bankruptcies with the collapse of FTX as the headline of issues miring this emerging sector, blockchain technology and cryptocurrency is the new way of finance. Most traditional financial companies could adopt the blockchain technology infrastructure to scale transactions and rid themselves of the fragmented nature of the old systems.

Although crypto is not regulated globally, crypto regulation will see a significant spike in the number of cryptocurrency exchanges. This will result positively in the trading volume of centralized exchanges.

Many will complain about hidden risks due to the unpredictability of the market, but major developments in the industry prove otherwise. [CoinMarketCap](https://cointelegraph.com/news/coinmarketcap-launches-proof-of-reserve-tracker-for-crypto-exchanges) launched a new feature, called Proof-of-Reserve tracker, for crypto exchanges in November. PoR provides transparency of an exchange's cryptocurrency reserves via a verifiable auditing practice. With the new feature, users can access the total assets held by an exchange, its balance, and its public wallet address ownership.

Exchanges such as Bybit, Huobi, Crypto.com, OKX, Bitfinex, and Kucoin have released their PoRs to show their customers that their coins are in safe hands. 

Crypto regulation is needed. The right time may have come for the SEC, CFTC, European Union, MAS, and the African Union to pull the plug on this highly volatile industry.


yellow image of cryptocurrency statistics and clipboard with regulations on it

Is Crypto Regulated Across the Globe? 

This next quarter, the central bank in Russia will start looking into two different potential cross-border CBDC settlement models.

There are continuous sanctions against Russia due to its invasion of Ukraine. Yet, reports indicate that Russia's central bank is about to begin building a cross-border settlement system using a central bank digital currency (CBDC).

[According to a report published on 9 January by media outlet Kommersant](https://cointelegraph.com/news/russia-to-begin-work-on-cbdc-settlement-system-in-q1-as-sanctions-endure-report), the digital rubble plans are expected to progress in the first quarter of 2023. Russia's central bank will study two possible cross-border settlement models before moving forward.

## CBDC Russia future: Bilateral agreements or hub-based platforms

In the proposed plan’s first version, different countries will integrate their CBDC systems by entering into separate bilateral agreements with Russia. 

Each agreement would be crafted to ensure that asset conversion and transfer between the nations would be compliant with the rules outlined in the other agreements.

The second, more complicated approach suggests establishing a single hub-like platform on which Russia and other countries can engage, sharing common protocols and standards to make it easier for connected countries to make payments to one another.

Roman Prokhorov, the Financial Innovations Association (AFI) board of directors' head, expressed his opinion that the first model was less promising for bilateral interactions between countries, but was easier to implement.

While the first model was simpler to implement, the second was more complex. The other choice was deemed more "advanced," and its proponent evaluated the possibility of implementing an initial two-way system.

He viewed China as the most likely partner in this scenario due to the country's "technical and political readiness". [According to reports from September,](/news/article/russia-approves-cross-border-crypto) Russia's plans to use digital currency for settlements with China may only occur sometime in 2023. Others, however, believe that technological limitations rather than political ones will support the CBDC Russia proposes.

## CBDC Russia will not improve political situation - claim

Alexey Volkov, the vice president of the Association of Banks of Russia, stated that the introduction of a digital ruble will not change or improve the global political situation of the country and that trials for the Russia CBDC platform can only be undertaken with countries that are friendly with the Russian government and are technologically ready.


Russia to Develop CBDC Settlement System

The governor of the French central bank, Francois Villeroy de Galhau, has called for stricter licensing criteria and requirements for crypto companies operating out of France. His comments come after taking into consideration the current turbulence in the crypto market.

During his speech on 5 January in Paris, the Bank of France governor stated that [France should not wait](/news/article/france-crypto-rules-under-pressure) for the upcoming crypto [laws in the EU](/news/article/eu-crypto-regulation-save-energy) to impose compulsory licensing for local digital asset service providers (DASPs).

The Markets in Crypto Assets Bill (MiCA) by the European Parliament lays out a crypto licensing order not expected to be put into force until 2024.

In a 5 January report from Bloomberg, the governor talks about the country's financial industry, stating that all the chaos in 2022 only points to one thing. That is, France should move to a compulsory licensing of DASPs instead of just a registration as soon as possible.

Presently, all crypto businesses that offer crypto custody and training must only register with the Financial Markets Authority (AMF), the country's market regulator.

## The French central bank governor urges for licensing after MiCA amendment proposed

The push for licensing comes after an amendment was proposed in December by Hervé Maurey, a member of the senate finance commission. The amendment called to eliminate a clause that allows companies to operate without a license.

Currently, the laws in France allow companies to operate without needing a license until 2026. This is to remain the same until MiCA passes a regime that does not allow companies to run unlicensed. 

Considerations regarding the amendment will begin in January in the parliament.

MiCA has been a work in progress for the EU parliament since September 2020. On 10 October, a European Parliament committee passed the [crypto framework](https://cointelegraph.com/news/european-parliament-committee-passes-mica-crypto-framework-in-landslide-vote) on Economic and Monetary Affairs as a result of deliberations between the European Commission, EU Council, and European Parliament.


yellow image of french central bank banque de france

French Central Bank Boss Urges Crypto Licensing

United States financial regulators have issued their first-ever combined warning to banks regarding cryptocurrency risks and the potential dangers of crypto markets and digital assets.

The regulators warned the financial institutions to guard against fraud, legal uncertainty, and deceptive disclosures by digital asset companies. [A notice was also sent to banks over the "contagion risk" posed by the sector](https://www.bbc.com/news/business-64159452).

It comes less than two months after the trading platform FTX went offline, which sent shockwaves across the cryptocurrency market. The joint statement from the Federal Reserve and Federal Deposit Insurance Corporation, alongside the Office of the Comptroller of the Currency, stated that they were closely watching the activity of banking organizations regarding cryptocurrencies.

According to the statement, "The events of the previous year have been characterized by high volatility and the exposing of weaknesses in the crypto-asset industry."

The authorities also stated that it was "very likely inconsistent with safe and sound banking procedures" to issue or hold tokens stored on public, decentralized networks.

## US regulators issue warning to banks on cryptocurrency risks

In addition, banks were encouraged to take action to prevent issues in the digital asset market from spreading to the broader financial system.

"Risks associated with the crypto-asset sector that cannot be mitigated or managed mustn't move to the financial system," it continued.

"The banking system is not a suitable environment for these risks."

The statement released on Tuesday follows several months of reluctance by watchdogs of the US financial industry to publish universal recommendations on cryptocurrencies, even though institutions have requested clearer advice from authorities.

[The failure of the FTX exchange](/news/article/is-crypto-dead) in November sent shockwaves through the sector. It was the second-largest cryptocurrency exchange in the world, serving as the gateway for millions of consumers to enter the market for digital assets.


sign pointing to safe or risky over red image of american flag and cryptocurrency coins

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