Despite being a world-famous technology for well over a decade, cryptocurrency still exists in somewhat of a regulatory wild west. Governments and regulators are still grappling with advances in the technology and trying to figure out the best path forward regarding their laws.
Regulation updates can have a profound effect on the bitcoin trading and on the bitcoin market in general. Here are 5 of the most recent and important updates to regulation in the crypto space, and how they might influence the market.
1. United States SEC Takes Strong Actions
The main regulator taking action on cryptocurrency issues in the US is the Securities and Exchange Commission. It’s a federal agency with the job of protecting investors in the US.
When the SEC is successful in punitive action against crypto projects, it’s important because it can set a precedent. Recently, the SEC took a very important action against Telegram and its ICO. The SEC published on the 14th of June 2020 that it made settlements with Telegram forcing it to return $1.2 Billion to investors of its ICO and pay an $18.5 million dollar fine to settle the charges.
This is a big deal as it shows the strong intent of the SEC to make sure all ICOs in the US are registered and dealt with as securities. It’s also a big step over the actions the agency took with block.one, the issuers of the EOS ICO. This is because the SEC made Telegram return money to investors, rather than just pay a fine.
Interestingly, these developments come as the Supreme Court passed a ruling limiting the total amount of fines that the SEC can give to cryptocurrency companies. These developments show the crypto market that the US is willing to look positively on crypto projects, but only if they play by the rules.
2. Japan Adopts New Crypto Regulation Framework
Japan has always been one of the heavyweights in the cryptocurrency world. It was the first country in the world to legally define laws specific to “Virtual Currencies”, and recently the country has changed its direction on cryptocurrency regulation.
The new legal framework for virtual currencies is highly detailed. You can see a legal summary of the new laws here. The laws define many terms and boundaries for cryptocurrency organizations, including clearly defining which kinds of organizations are legally regarded as dealing with virtual currencies. The laws go as far as stating how exchanges must operate, including requirements on how to hold user’s funds in cold storage.
The new legal framework is designed to give clarity and direction to the cryptocurrency industry in Japan. But, it’s already having negative effects for some Japanese cryptocurrency users. For example, in April 2020, Bitmex announced that it would restrict access to Japanese residents. They stated that the restrictions were a direct result of the new local laws in Japan.
3. South Korea Passes New Crypto Laws
South Korea recently passed a comprehensive legal framework for cryptocurrencies. The new laws are the first big step in bringing cryptocurrencies fully into the mainstream in South Korea.
South Korea has had a troubled history with crypto. The country was at the forefront of the cryptocurrency boom back in 2017. Many South Koreans invested in cryptocurrency, and many lost their investments when the bubble popped. The governments stepped in to ban many crypto-related activities such as ICOs to protect its citizens.
However, now the government wants to lead the way again in cryptocurrency technology. The coronavirus pandemic has hit the South Korean economy, and the government is looking for novel ways to boost the economy. The new laws are designed to put South Korea in a good position to become a global blockchain hotspot.
In the laws are the makings of some strict Anti Money Laundering laws. These will mean that any bitcoin exchange or bitcoin trading platform operating in South Korea will have to report to local authorities just like other financial institutions. Under this framework, South Korean exchanges will be legal, but restricted.
4. India Crypto Banking Ban Overturned
In 2018, the Reserve Bank of India made the historic decision to ban banks from providing services to cryptocurrency and BTC exchanges. This decision effectively banned all cryptocurrency companies and bitcoin exchanges from operating and interfacing with India’s mainstream financial system. Recently, that decision has been overturned in a landmark appeal in India’s Supreme Court. It’s a decision that effectively reverses the Indian crackdown on cryptocurrencies.
This is a big deal for crypto in India and Asia. It blows the market wide open again for the best cryptocurrency exchanges and startups to resume operating again. This will bring in investment for all kinds of crypto projects in India. Overall, it’s highly likely to have a positive influence on the crypto market around the world.
5. China Passes New Cryptography Law
China is one of the most exciting and controversial places for cryptocurrency, so developments here are closely watched. Recently, China has approved new laws regarding cryptography, the technology underpinning all cryptocurrencies. The official purpose of the law is to regulate the space and ensure the security of information technology in the country.
China has also passed new laws officially protecting cryptocurrency as an inheritance. This is combined with court rulings judging Bitcoin and Etheruem as official properties protected by law.
These regulatory developments in China show how serious the government is about cryptocurrencies. It’s clear China wants to lead in the cryptocurrency space and is creating the legal frameworks for that to happen.
The Influence on the Market
These developments are the latest in a long line of updates around the world. Some are restrictive and have caused even the best bitcoin exchanges and companies some problems. But, overall they provide clarity on how cryptocurrencies are allowed to operate around the world, which will be good for the entire market in the long term.