Crypto Regulations are about to evolve
Europe and crypto regulation
Cryptocurrency regulations in Europe continue to evolve, with France adopting a softer approach to crypto licensing in the country. French lawmakers have voted through an amendment proposed by centrist politician Daniel Labaronne, which will allow existing crypto firms to continue operating without a full license until the European Union’s landmark crypto regulations are brought into force.
Currently, France has a two-tier regime for crypto firms. All operators must register as crypto asset providers, but they do not have to gain a full license, a process that requires higher levels of disclosure. While around 60 providers have registered with the regulator Autorité des Marchés Financiers (AMF), none have opted for full authorization. The amendment does, however, require any new entrants to the market to gain a full license if they launch in 2024 or later.
This decision to adopt a more relaxed approach to crypto regulations in France is seen as a pragmatic one, aimed at striking the right balance between fostering innovation in the country and providing a safe environment for users. It’s also a message to the sector about the exemplary nature and professionalism expected of the players as the industry moves towards harmonization of European regulations.
The crypto market has been in turmoil for some time now, with many crypto firms filing for bankruptcy due to the high volatility and lack of regulation in the market. This has led to many customers losing significant amounts of money. The bankruptcy of FTX, one of the leading crypto exchange firms, underlines the need for investor protection.
Crypto regulation worldwide
Many countries are now beginning to implement stricter regulations regarding crypto, recognizing the need to protect investors and prevent fraudulent activities. These regulations also provide a framework for legitimate crypto businesses to operate within, which can help to increase trust in the industry.
In the United States crypto regulation is a complex and evolving topic. Cryptocurrency, also known as digital or virtual currency, is a form of decentralized currency that uses encryption techniques to secure transactions and control the creation of new units.
The US government has taken a cautious approach to cryptocurrency regulation, recognizing the potential benefits of digital currencies but also concerned about the risks of money laundering, terrorist financing, and other illegal activities. As a result, there is currently no comprehensive federal regulation of cryptocurrencies in the United States.
Instead, the US government has adopted a patchwork of regulations that vary by agency and by the type of cryptocurrency activity. The Securities and Exchange Commission (SEC) has taken the lead in regulating cryptocurrencies that are considered securities, such as initial coin offerings (ICOs). The Commodity Futures Trading Commission (CFTC) has jurisdiction over cryptocurrencies that are considered commodities, such as Bitcoin. And the Financial Crimes Enforcement Network (FinCEN) has issued guidance on how anti-money laundering (AML) and countering the financing of terrorism (CFT) regulations apply to cryptocurrency activities.
One of the most significant regulatory developments in the US has been the SEC’s determination that many ICOs are considered securities and are subject to federal securities laws. This has led to a number of enforcement actions against companies that have conducted ICOs without registering with the SEC or following other securities laws.
In addition, the IRS has issued guidance that cryptocurrencies should be treated as property for tax purposes, which means that gains or losses from cryptocurrency transactions are subject to capital gains tax.
Regulations are now the norm
The EU’s Markets in Crypto Assets (MiCA) regulations, which are expected to be implemented by 2026, aim to unify the approach to crypto across the 27-country bloc. The package of regulations is expected to go to a vote this year, and if passed, will take another 18 months to be enforced.
The crypto market is evolving, and regulations are becoming increasingly important. The French government’s decision to adopt a more relaxed approach to crypto licensing, while still requiring new entrants to the market to gain a full license, is a pragmatic one that aims to strike the right balance between fostering innovation and protecting users. The EU’s MiCA regulations also aim to unify the approach to crypto across the EU and provide a framework for legitimate crypto businesses to operate within. The crypto market has seen many companies filing for bankruptcy, and this highlights the importance of investor protection and the need for stricter regulations.