Crypto regulations are a top priority for some countries, which are acting swiftly as digital currencies continue to disrupt fiat currency. Volatile markets and a rise in cryptocurrency adoption are driving regulatory frameworks outside of the United States.
Source: PYMNTS
Countries With Regulatory Frameworks for Crypto
Regulatory frameworks are in place in the following countries:
- Bahamas
- Bahrain
- Cayman Islands
- Estonia
- France
- Germany
- Gibraltar
- Hong Kong
- Japan
- Malaysia
- Mauritius
- Singapore
- Switzerland
- UAE
Certain countries prohibit cryptocurrencies, such as China, Qatar and Saudi Arabia. Many countries are also in the process of regulating crypto or have plans to do so, including the United Kingdom, Australia, Austria, Canada, Denmark, Italy, Luxembourg, New Zealand, Panama and South Africa.
Europe’s Markets in Crypto-Assets (MiCA) was recently adopted and is one of the largest frameworks in regulating crypto in the world. The passage in 2023 forces the new MiCA rules by mid-2024 or the beginning of 2025 and revolves around:
- Outlining asset-referenced tokens
- Outlining electronic money tokens
- Supporting innovation while creating strong consumer protections
What MiCA does, and many other countries are likely to follow, is set a basis for what stablecoins are and to understand if these coins are truly “stable.” Safeguards are put in place to help reduce financial stability risks while also allowing crypto to flourish if it meets all requirements.
The framework will stretch to the 27 members of the E.U.
Switzerland’s regulations allow for the widespread use of crypto and put the currency into the same class as gold or property ownership. Japan’s regulations have taxes in place for trading crypto, income earned on the currency and even mining and lending of the currencies.
Watchdogs recommend new, global crypto standards that can help companies maintain similar guidelines to follow.
Watchdog Creates First Global Crypto Standards
In May 2023, the securities watchdog IOSCO unveiled its global standards for regulating crypto and digital markets. The reveal came after the collapse of the FTX exchange last year, which drew concerns about consumer protection.
While the crypto industry has to follow anti-money laundering checks, other regulations can vary from one jurisdiction to the next.
IOSCO aims to set global regulatory standards. The watchdog’s proposed standards address issues with:
- Market manipulation, including market surveillance requirements, cross-border cooperation, enforcement against market abuse and more.
- Conflicts of interest, including order handling, organizational governance, trade disclosures, admission to trading and more.
- Custody of cryptoassets, including the handling of client assets, securing assets, reconciliation of client assets and more.
- International regulatory cooperation
- Treatment of retail customers
- Operational risks
The proposed framework includes 18 recommendations.
A regulation framework, such as the one suggested by IOSCO, can help curb criminal activity and benefit anyone involved in crypto trading.
The IOSCO group consists of regulators from the U.K.’s Financial Conduct Authority, Japan’s Financial Services Agency, the U.S.’s Securities and Exchange Commission and Germany’s BaFin.
Final Thoughts
IOSCO’s move comes after the European Union finalized its own set of rules for regulating crypto (MiCA). Their regulations put increased pressure on other countries, like the U.S. and the U.K., to set their own standards.
While some countries have already established their own regulatory frameworks, many more have yet to address the issue and take steps to protect consumers.