Effective regulations are one of the key gateways to cryptocurrency’s mainstream adoption. Crypto businesses were able to gain greater acceptance from regulators around the world due to their higher compliance. Despite the fact that the crypto industry was granted many operational licenses and had access to new markets, the reputation of the industry with regulators and investors alike was hurt by the loss of Terraform Labs, FTX, and Celsius.
We are looking back at 2022, and what it meant for the cryptocurrency sector. This is why we want to highlight how the regulatory landscape has changed.
China’s blanket ban on crypto mining and trading from late 2021 positioned the United States as the torchbearer for crypto disruption by default. The U.S. not only has the largest crypto ATM network but also contributes the most to Bitcoin’s (BTC) hashrate.
Nonfungible tokens (NFTs), out of all the crypto sub-ecosystems were at the forefront of American politics. It is clear that crypto won the Federal Election Commission’s (FEC) approval of the use NFTs as political fundraising incentives.
The collapse of FTX as well as the arrest of Sam Bankman Fried, the former CEO, were seen by many regulators to be a reflection of the criminal activities of the entire crypto community. This led to a decrease in anti-crypto sentiment from many U.S. politicians like Representative Brad Sherman. However, Representative Tom Emmer sided with the crypto community as he pointed out the community’s contribution to tracking Bankman-Fried’s illegal activities.
Citing the FTX collapse, the Canadian Securities Administrators — an umbrella group of securities regulators across Canada — banned crypto leverage and margin trading to protect investors. In addition, Canadian energy provider Hydro-Québec rolled out plans to reallocate energy supplied to crypto mining firms, citing the high energy demands anticipated during the harsh Canadian winter.
The Crypto-Asset Environmental Transparency Act was also introduced by U.S. regulators. It directs the Environmental Protection Agency, to report on crypto miners’ energy use and environmental impacts.
Central and South America
El Salvador is the country that contributes most to mainstreaming Bitcoin in the far south. Although many people pointed out the unrealized loss due to falling Bitcoin prices, President Nayib Bukele announced an innovative BTC investment strategy where the country would purchase 1 BTC every day beginning Nov. 17, 2022.
We are purchasing one #Bitcoin Every day starts tomorrow
— Nayib Bukele (@nayibbukele) November 17, 2022
Furthermore, in November, Economy Minister Maria Luisa Hayem Brevé introduced a bill confirming the government’s plan to raise $1 billion and invest it into the construction of a “Bitcoin city.”
Brazil introduced a pro-crypto regulation, despite a slow start. In late 2013, Brazil’s former President Jair Bolsonaro signed a bill that would allow the legalization of crypto as a method to pay for goods and services within Brazil. Brazil recently granted Crypto.com a Payment Institution License, which allows the exchange to offer fiat wallet services to Brazilians.
Many Asian regulators listened to crypto businesses and allowed them to operate after careful consideration. India implemented a new tax system for crypto, while China loosen its grip on the crypto permaban.
In the case of China, the Shanghai High People’s Court issued a ruling stating that Bitcoin is subject to property rights laws and regulations. Bitcoin owners were granted the right to compensation for unpaid loans, as the court recognized the value, scarcity, and disposability of the asset.
India imposed two new crypto tax policies at the start of the year — one imposing a 30% tax on crypto profits and the other imposing a 1% tax deduction at source on every crypto transaction. Local trading volumes suffered as the laws were not enforced. Investors continued to hold on to their assets hoping for better regulations. India plans to develop standard operating procedures for cryptocurrency during its G20 presidency (which will be up until Nov. 30, 2023).
Pakistan’s central bank, on the other hand, signed new laws to expedite the launch of an in-house central bank digital currency (CBDC) amid hyper inflation concerns.
Just like in the United States, the fall of Terraform Labs left a bad taste in South Korean regulators’ mouths. The island nation spent the majority of 2022 pursuing down bad actors responsible to investor losses. Moreover, the country’s 2021 implementation of Know Your Customer requirements saw a drastic reduction in hacking activities throughout 2022.
Europe and the Middle East
The Russia-Ukraine war indirectly showcased cryptocurrency’s prowess in serving the unbanked. As millions of people lost their savings, cryptocurrency emerged as a rescue option.
While crypto donations helped displaced citizens, fleeing Russians used it to bypass their country’s currency controls. Within two weeks of the conflict, crowd funding had raised $108 million to help Ukraine’s war relief. Another group raised $54million worth of crypto funds in order to purchase vests and scopes for Ukrainian fighters.
By raising $54 million @_AidForUkraineOur defenders have been provided with military equipment, armor, clothes, and even vehicles. Thank you to the crypto-community for your support since the invading of full-scale. Donate by donation to the big triumph. Below is a report. pic.twitter.com/lifHAP8R4f
— Mykhailo Fedorov (@FedorovMykhailo) August 17, 2022
The European Union’s Committee of Permanent Representatives approved the Markets in Crypto-Assets framework, which aims to create a consistent regulatory framework for cryptocurrencies among European Union member states.
The International Monetary Fund, a major financial agency of the United Nations, called for increased regulation of Africa’s crypto markets. According to some reports, the Central African Republic has passed a bill to allow cryptocurrency trading in financial markets.
The United Kingdom requested regulatory changes to tighten oversight of the crypto industry. Reacting to the FTX collapse, the U.K.’s HM Treasury issued guidelines for the Financial Conduct Authority to monitor the operations and advertising of crypto companies in the country. This influenced a new 2023 law to ban crypto services from overseas from operating in the U.K.
South Africa’s financial regulator, the Financial Sector Conduct Authority, updated the country’s 2002 Financial Advisory and Financial Intermediary Services Act to declare crypto as a financial product subject to financial services law.
This is a historic moment in South Africa’s history
The Financial Sector Conduct Authority (FSCA), today declared a crypto asset a financial product under Section FAIS Act.
This Declaration was published in the Government Gazette, as well as on the FSCA Website.
— Farzam Ehsani (@farzamehsani) October 19, 2022
To enforce its CBDC, the eNaira, Nigeria has banned ATM cash withdrawals exceeding $225 (100,000.nairas per week). To expand its services on the African continent, the regulatory approval was given to African crypto exchange Yellow Card.
Although the Dubai Virtual Assets Regulatory Authority issued many operational approvals for crypto business in 2022 it had to revoke FTX MENA’s Minimum Viable Products license.
Australia recently overtook El Salvador as the fourth largest cryptocurrency ATM hub. Australian financial regulators continue their efforts to establish a regulatory framework that regulates stablecoins.
Africa and Oceania
Although the achievements mentioned above are not the best, the crypto industry made substantial progress throughout the year. Crypto firms that have strong compliance programs are paving the way for mainstream adoption in 2023, as they understand the importance of regulations.
Check out Cointelegraph’s crypto roundup of 2022 and what it means for the community in 2023.