Cryptocurrency in 2021 — How the World is Dealing with the Changing Regulatory Landscape
Cryptocurrencies have been the hot topic this year due to several events like Tesla’s crypto purchase (the company did withdraw afterwards, which resulted in yet another scandal on social media). Did you know that the cryptocurrency market is expected to reach $5,190.62 million by the end of the year 2026? While many countries are introducing crypto-based transactions, states like Turkey and the UK are planning on banning them for good. However, the regulatory landscape may change the game for this sector. Let’s take a look at how the laws for virtual currency have evolved over time worldwide.
The crypto exchanges in the UK were allowed to operate in the country after registering with FCA. However, this changed in October 2020 and there is a complete ban on cryptocurrency investments in the UK. As of January 2021, all crypto-related investments are banned in the country. DFCA revealed that retailers can save up to USD 70 million since all illegal activities using virtual assets will no longer exist.
By federal and law states, cryptocurrencies are not considered legal in the United States. However, the letter from the US Office of Comptroller of the Currency officially confirmed that US banks can now use cryptocurrencies to make bank transactions seamless for customers.
FinCEN proposed laws to bridge the gap in virtual asset transactions and as per the laws,
- Banks and all FinTech companies have to report all the customer information to the regulatory authority if the transactions are above $10,000
- Financial businesses have to comply with the AML laws for all transactions between $3000 and $10,000 according to the Bank Secrecy Act (BSA)
- Information that has to be reported includes the type of transaction and time along with their value in USD
The Payment Services Act was amended by the Parliament of Singapore in January 2021. As per the amendments, every crypto exchange must acquire a license for operating in the country from the Monetary Authority of Singapore (MAS). Before this amendment, only service providers that possessed virtual assets or money had to obtain this license. As of January 2021, any exchange that facilitates transmission, exchange or money is regulated.
According to the law-making bodies of the country, these alterations in the regulations will mitigate the risk of FinCrime like money laundering using virtual assets.
Given the rapid increase in money laundering, terror financing and tax evasion using cryptocurrencies, Turkey also stepped up and banned virtual assets in the country. The ban was implemented on April 30, 2021, and the Central Bank of Turkey said,
“Their use in payments may cause irreparable damages for the parties to the transactions, and include elements that may undermine the confidence in methods and instruments used currently in payments.”
Cryptocurrencies became legal back in 2017 in Australia and declared that virtual assets are regulated by the AML/CFT 2006, section 5 and all other associated laws. In 2017, AUSTRAC announced more rigid regulations for cryptocurrencies. As per these crypto regulations, crypto exchanges in Australia have to register with AUSTRAC in compliance with the AML/CFT 2006 Part 6A. In 2019, the Australian Securities and Investments Commission (ASIC) also issued an update on the regulatory requirements for cryptos and ICOs. Last year, many laws were devised for a certain cryptocurrency — privacy coins.
Investor protection and fraud prevention is the primary concern of regulatory bodies in China. The country has taken certain actions to combat financial crimes like money laundering and terror financing. The Chinese government has banned Initial Coin Offerings (ICOs) declaring them illegal. Also known as China’s ICO Rule, warnings for various financial crimes have been put forward, including false fundraising schemes, pyramid selling and issuing illegal tokens. The regulation extends to third-party vendors and restricts them from sales and purchase of virtual assets.
To Sum Up…
The regulatory landscape for cryptocurrencies has significantly changed over time. While some countries have now banned cryptos, many have tightened laws to prevent money laundering, terror financing and other criminal activities. The UK, China and Turkey have out a complete ban on crypto-related transactions. On the other hand, Australia, Singapore and other states are working on more rigid laws