Cryptos & How Coin Regulation Is Changing Globally

By IndraStra Global Editorial Team

Cover Image Attribute: Photo of various cryptocurrency medallions next to a gavel. / Source: Wikimedia Commons

Virtual currencies appeared on the Web in 2009, when Bitcoin debuted as the Internet's initial digital coin. At that time, not many believed in the potential of blockchain technology, and in the following years, much of the planet remained oblivious to these payment forms. It was not until the mid-2010s that Bitcoin got more massive attention. That happened first chiefly among tech enthusiasts and then the masses. 

Its spike in popularity got credited to the significant media attention given to this cryptocurrency during its inceptive periods of rapid price appreciation, when its value went from $13.28 per unit to $1,238 in 2014. Bitcoin got even more mainstream traction in May 2018, when it hit $20,000 per one BTC. At the time of writing, Satoshi Nakamoto’s virtual asset traded at $61.511 for one BTC, showing just how much hype this speculative good has generated and how many people nowadays are looking at it, trying to capitalize on the volatility in this market.

The Rising Popularity of Bitcoin & Its Regulation

As mentioned above, the worldwide stance towards cryptos changed around 2014. Aside from the stunning price jumps, this was a time when some industries became more open to adopting this asset transfer option. The online gambling sphere was one of the preliminary ones, as in the cited year, Antillephone, a Curacao Internet gaming master license holder, started to regulate cryptocurrency-based gaming sites. Today, these crypto casinos are all the rage, featuring robust collections of online slots and novel interactive gaming products like Spribe’s Aviator Game. In 2014, Software giant Microsoft also entered the crypto arena by announcing that it would begin allowing Bitcoin payments on its Windows smartphone apps and for Xbox purchases.  

Slightly before all this unraveled, the first regulatory actions got created concerning cryptos. It goes without saying that the concept of digital currencies has been an intriguing one since its inception. However, many users feared the lack of uniformity in this space and that the technology’s rapid development would outpace regulatory frameworks.  In 2013, FinCEN, or the Financial Crimes Enforcement Network of the United States, established its decentralized currency regulatory guidelines, and shortly after, the People's Bank of China took action against Bitcoin, banning its financial institutions from accepting it. Things have been up and down on this front for years, but it now seems that countries are taking a firmer stance on crypto regulation, something that we get into more in-depth below.

The Current State of Crypto Regulation

The unique nature of cryptocurrencies brings about various challenges from a regulatory perspective. It is no secret that secretive transactions are one of the main selling points of this technology. It is accurate that now all blockchains offer total anonymity but must supply a privacy level that traditional finance systems do not. That appeals to many individuals, as more people value confidentiality in this age where we continuously give away personal information to various entities to function in today’s modern world. Hence, it is natural that anonymity would hinder regulators, as cryptocurrencies enable borderless transactions and can potentially get used for things like tax evasion and money laundering. 

Different countries have taken varied stances regarding what aspects of crypto regulation they should focus on. For example, France, the United Kingdom, South Africa, and Canada have created rules governing the promotion and marketing of crypto assets. The EU, Japan, and Vietnam are among many territories with a licensing regime for platforms that act as custodians and crypto exchanges.

The EU, in particular, also has different ways to ensure crypto investor and consumer protection, mandating adherence to various disclosure policies while implementing anti-money laundering/know your customer procedure coordinated via FATF’s Travel Rule and boasting fiat-backed stablecoin regulation. The latter is something the United States and the United Kingdom have explored.

On the topic of crypto oversight and government management in the US, it should get pointed out that the US Treasury Department announced in early 2020 that it would incorporate a more aggressive viewpoint on how it will deal with virtual assets, mainly to add transparency to this complex asset class and reduce financial crime involving it. Yet, as of early 2024, not much progress has been made on this front, as the IRS (which views cryptos as property) and the Treasury Department have publicly stated that businesses receiving payments that are less than $10,000 in value are not considered cash, and do not have to get reported until novel regulations gets issued. FinCEN does not consider cryptos as legal tender, and the Securities and Exchange Commission looks at them as an ETF or a stock trading on a securities exchange.

The EU’s New Rules & MiCA

In May 2023, the European Union passed legislation aimed at combating money laundering through added AML cryptocurrency regulation. The named Regulation 2023/1113 supplements, or better yet, expands on Regulation 2015/847 by requiring crypto-asset service providers to gather info on transfer senders/recipients. That is something that will become obligatory irrespective of the size of the transaction involved and will become effective from December 30, 2024.

On top of Regulation 2023/1113, the EU introduced the Markets in Crypto-Assets (MiCA) Regulation (2023/1114). This is a section from a broader package on digital finance initiated in September 2020 that should also become law from December 30, 2024. It tries to guarantee financial stability and enhance consumer protection in the crypto sector. These are sets of rules that attempt to prevent fraud. With these conditions in place, stablecoin issuers will now get mandated to maintain a liquid reserve ratio of 1:1. That shall be something that will get overseen by the EBA or European Banking Authority. Issuers must also have a presence in the EU for issuance. NFTs or non-fungible tokens are not a part of MiCA, in general. 

It goes without saying that these efforts are a commendable and concerted attempt to increase crypto space oversight. They are a proactive approach to addressing some of the many challenges in this quickly evolving area of digital finance.

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