Though the past few years brought considerable growth to crypto, there has been a significant decline in 2022 and 2023. There have been spectacular highs and then visible lows, which resulted in increased regulations from governments across the globe. The lows have been mainly the result of fraud, firm failures, and mismanagement of funds.
The increased risks have also been there due to increased political and economic instability across the globe. Though the risks continue, governments have taken definitive steps to ensure that the customer is protected at all costs. US, EU, and Asian countries have continued legislation to ensure that the customer is protected and companies continue in an improved manner.
We look into the detail of how the new rules of the game have affected/strengthened the newly emerged field of crypto in 2023 and what the prospects are ahead.
Understanding crypto regulations
Cryptocurrencies came to the fore as the result of the global financial crisis in 2008. It was the result of this situation that a search for possible alternatives to traditional finance began. Bitcoin was the result of these efforts as it was presented as an alternative economic model with a clear regulatory framework.
The problem was the regulation of Bitcoin and the following cryptocurrencies for governments across the globe. It was not only that model was new, but customer experience and exposure were required to regulate it. Though minor regulations continued, there had been no major framework for more than a decade.
Cryptocurrencies haven’t only been about decentralization but also anonymous transactions. They have continued to evolve and posed significant challenges for governments because they have penetrated borders across the globe. The demand for legislation began in 2022, and it has continued in 2023.
The main aim of these regulations isn’t to stifle the industry but to make sure that it grows, not at the cost of the customer. Governments are considering various aspects, which include scams, fraud, money laundering, tax evasion, etc.
Different stances: US, EU, Asia
The stances of different countries have varied as some have outrightly banned crypto while others have gone for increased regulations. We take into view the developments on the part of the US, EU, and the major Asian players.
The SEC and IRS have been the leading state authorities that have worked on the monitoring of the crypto industry in the US. They have covered key areas like ICOs, investment products, and cryptocurrency taxation. In addition to that, the federal authorities are working on the development of an elaborate framework for regulation purposes. President Biden’s executive order is a link in the chain of steps being taken to secure the customer.
European Union has also taken active steps to ensure the development of a proper regulatory framework. European authorities have worked on the development of MiCA which is a framework covering all aspects of crypto regulation. It is aimed at fostering transparency and creating a safe environment for crypto investors.
Key players in Asia that have taken active legislation include India, Japan, and South Korea. They have adopted a balanced approach to crypto in order to ensure that the customer and investor are both in a safe zone. In contrast, China has outrightly blocked the way for the promotion of crypto. It has not only clamped down on Bitcoin mining but also banned crypto trading.
Driving adoptions or creating hurdles?
Though some companies and users have criticized the development of new regulatory frameworks for crypto, it needs to be seen whether the new changes are driving adoptions or creating hurdles.
Some see these regulations as a step toward the legitimization of cryptocurrencies and the mentioned industry. Though the industry will see a boost as the result of new regulations, the governments are currently treading a bordering range of encouraging and posing threats. An example is India’s crypto tax which might backfire if the percentage of tax isn’t lowered.
KYC and anti-money laundering measures will help not only the industry grow but will also improve customer trust. Thus, the monitoring of policies in order to ensure that no negative events happen is necessary.
Crypto has remained one of the most resilient industries, which has continued to grow despite the increased difficulties. It is evident from the growth of market leaders like Bitsoft 360, which has continued to attract customers. Though there are challenges in the form of regulations, taxation, and other measures, there is a positive effort seen from governments across the globe.