2022 will surely be remembered as a year of crypto discontent — one when the price of Bitcoin crashed three times, many large companies went bankrupt and the industry experienced a series of significant lay-offs. However, it was a crucial year for crypto regulation worldwide. Although some regulatory developments are worrisome in terms of their tighter stance on digital assets, their effect could help the industry to mature in the long run.
Looking at the significant regulatory events of 2022 might fuel one’s optimism for the future. The controversial policy to restrict proof-of-work (PoW) mining was supported in New York, but a similar one failed in the European Union. In some jurisdictions, like Brazil and Russia, crypto is undoubtedly gaining momentum.
Of course, there were many more landmarks to remember, but Cointelegraph tried to choose those representing larger regional trends.
The Markets in Crypto-Assets bill
It is fair to put the European Markets in Crypto Assets bill in the first spot because it has passed all the voting stages in the European Parliament and should become law in 2024. The comprehensive crypto framework was first proposed by the European Commission in September 2020 and has been making its way through the various stages of deliberations ever since. Some in the industry, like Binance CEO Changpeng Zhao, expect it to become a regulatory standard copied worldwide.
The bill includes a transparent licensing regime, with the European Securities and Markets Authority designated as the responsible body. Provisions include strit riteria for stablecoin operators and higher legal responsibility for crypto influencers. Positively, a proposed amendment to the bill that would have effectively banned PoW mining and the incomprehensible 200 million euro ($212 million) cap for daily stablecoin transactions did not make it to the final draft. The bill represents a moderate approach, with an understandable emphasis on investor protection.
Also read: The United Kingdom’s plan to regulate crypto and the possible end of a favorable regime for crypto licensing in France.
Lummis-Gillibrand vs. Warren-Marshall
Unlike the European Union, in the United States, the race toward comprehensive legislation has just begun this year. The good news is that there are plenty of contenders.
A joint draft by Senators Cynthia Lummis and Kirsten Gillibrand opened the competition in June. The highly anticipated Responsible Financial Innovation Act (RFIA) contains a division of powers between federal regulatory agencies. Under the bill, the Commodity Futures Trading Commission would regulate investment contracts, which the RFIA qualifies under the new term “ancillary assets.” It also defines decentralized autonomous organizations, clarifies taxation on crypto mining and staking, and initiates a report on the highly controversial topic of retirement investing in digital assets.
There are several bills dedicated to stablecoins. The first, sponsored by New Jersey Representative Josh Gottheimer, would see the Federal Deposit Insurance Corporation back stablecoins like fiat deposits. The second, introduced in September, aims to ban algorithmic stablecoins for two years.
The antipode to the Lummis-Gillibrand bill is the Digital Asset Anti-Money Laundering Act, introduced by Senators Elizabeth Warren and Roger Marshall in December. It would prohibit financial institutions from using digital asset mixers and regulate crypto ATMs. Unhosted wallets, crypto miners and validators would have to report transactions over $10,000. Senator Warren has promised to write comprehensive crypto regulation legislation that favors the United States Securities and Exchange Commission in the role of regulator.
Also read: The Crypto Consumer Investor Protection Act and the Crypto Exchange Disclosure Act by Representative Ritchie Torres.
Russia U-turns on crypto
One of the largest markets for crypto mining, Russia, has made this year memorable for all the wrong reasons. Reaching the status of the most sanctioned state in the world, it joined the club of countries that regard crypto as a tool to mitigate their exclusion from the global financial system. Before the Feb. 24 invasion of Ukraine, the national crypto regulatory discussion was defined by the opposing viewpoints of the central bank and the finance ministry. While the central bank stood firmly against attempts to legalize crypto, the finance ministry has taken a more moderate approach.
The equilibrium shifted in the spring when the central bank issued the first digital asset license. Top officials publicly teased the option to use Bitcoin (BTC) as a foreign trade currency, and the deputy minister of energy proposed legalizing crypto mining. Since then, the Russian State Duma has considered at least three bills. One bill would legalize mining under an experimental regime, and the second would include crypto in the national tax code. The third, which prohibited digital financial assets as payments within the country, had already obtained the president’s signature.
Also read: What we know about Iran’s use of crypto for foreign trade.
Crypto mining moratoriums in the United States and Canada
Perhaps the most disturbing regulatory developments this year happened in the U.S. state of New York and the Canadian province of Manitoba. Both regions, famous for their attractive natural conditions for crypto mining, decided to impose moratoriums on crypto mining operations. This option has remained on the table since the beginning of the global discussion around the environmental disadvantages of proof-of-work crypto mining, with the less energy-intensive proof-of-stake (PoS) consensus mechanism touted as a more sustainable alternative.
Notably, the New York moratorium doesn’t ban PoW mining in principle, leaving the right to operate on the exclusive condition of using 100% renewable energy sources. It once again ties the discussion to the debate around “clean energy” as crypto miners and advocates prepare their arguments to win public opinion. Although only two small regions have initiated the moratoriums, the great battle between PoW and PoS supporters is far from concluded.
Also read: Bitcoin miners rethink business strategies to survive long-term, and Kazakhstan is among the top three Bitcoin mining destinations after the United States and China.
Brazil legalizes crypto as a payment method
At the end of November, the Brazilian Chamber of Deputies passed a regulatory framework that legalizes using cryptocurrencies as a payment method within the country. Although the bill doesn’t make crypto legal tender like occurred in El Salvador, it’s still significant, as it sets the foundation for a comprehensive regulatory regime.
The news may sound small compared with the big narratives about regulation in the United States or Europe. Still, it represents a continuing trend of crypto-friendly moves in Latin America. While Asian jurisdictions have been sending prohibitive signals in the last few years, with Washington and Brussels busy adopting their cautious approaches to digital assets, Latin American countries have shown bold strides toward adoption. Honduras attracts tourists to Bitcoin Valley, El Salvador continues to push its Bitcoin agenda, Paraguay paves the way for crypto regulation, and Argentina’s Mendoza province started accepting crypto for taxes and fees.
Also rea: Kenyan legislation establishes crypto taxation, Nigeria rolls out its central bank digital currency, and the Central African Republic adopts Bitcoin as legal tender.
#important #regulatory #developments #crypto