During a crypto event in London, the UK’s Economic Secretary to the Treasury Bim Afolami stated that the government is working intensively to ensure the new legislation regulating stablecoins and crypto staking. However, no specific details about the regulations were provided due to the ongoing developments in the field.
In 2022, UK Prime Minister Rishi Sunak pledged to establish the country as a global crypto hub, emphasizing the need for crypto firms to be able to invest, innovate, and scale up within the UK. Progress on implementing clearer regulations has been slow, despite calls from cryptocurrency firms for more concise rules.
The UK Law Commission published recommendations in July 2023 suggesting conducting a common law analysis of crypto assets and establishing an industry-specific panel consisting of technical experts, academics, and legal practitioners to advise courts on crypto-related legal matters.
On October 30, 2023, the UK government announced plans to introduce more crypto-specific regulations in 2024. This includes bringing the regulation of fiat-backed stablecoins under the purview of the Financial Conduct Authority (FCA).
In its statement, the SEC stated that the granting of the bitcoin ETF does not mean that the SEC is promoting the cryptocurrency and called for individual investors to be cautious when they invest in digital assets.
What is the exchange-traded fund?
Invented back in the 1990s, exchange-traded funds are baskets of bonds or other assets that are usually managed by the leading financial investment firms. They can be traded on the stock exchanges and, therefore, realise gains and losses from trading. They are invented as a platform for the individual investors to participate. By investing in several assets and diversifying its portfolio, individual investors reduce the chance for significant losses.
Why is the bitcoin exchange-traded fund important for digital assets?
Considering that cryptocurrency use and safe storage still require certain technical knowledge, the ETF offers the opportunity for individual investors to invest directly in the cryptocurrency markets without the risk associated with cybersecurity. The bitcoin exchange-traded fund opens the way to invest in digital assets managed by professionals. From eleven companies that applied for the SEC approval, there are some Wall Street financial giants such as BlackRock or Van Eck but also a new wing of the crypto and innovative tech industry such as Fidelity or Ark Investments. Together, they manage hundreds of billions of dollars that will now be exposed to the cryptocurrency market. The ETF will follow the spot price of the bitcoin cryptocurrency, and may benefit the price stability of bitcoin. It will also serve as a safeguard for individual investors from the industry known for its many blunders
The SEC announcement comes one day after the security incident related to their X account. In the alleged hack, shared content was news that the SEC approved spot bitcoin exchange-traded fund. Was this a message that went public by accident or mistake from the account holders? Or was it a malicious act from the third party to undermine the government agency? Answering this question will be the primary purpose of the FBI investigation announced yesterday by the Securities and Exchange Commission
The Australian Treasury has initiated efforts to further fine tune regulation around cryptocurrency. It has published a consultation paper titled “Regulating digital asset platforms” to outline its approach. Instead of creating new rules specifically for cryptocurrencies, the regulation of crypto exchanges will be carried out under existing financial services laws.
The main focus of this regulatory framework is to oversee and regulate cryptocurrency exchanges and service providers, rather than individual cryptocurrencies or tokens. The Australian Treasury is considering making it mandatory for crypto exchanges to obtain a financial services license from the local financial regulator. These proposed rules will only apply to crypto exchanges holding more than $3.2 million ($5 million AUD) or more than $946 ($1,500 AUD) per individual.
Why does it matter?
With a quarter of Australians owning some sort of cryptocurrency, the treasurer, Jim Chalmers, stated that they are taking swift and systematic action to create a regulatory framework that balances consumer protection with the promotion of innovation in the digital asset industry.
Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on markets in crypto-assets, and amending regulations. The EU market rules for crypto-assets
Crypto-assets are one of the main applications of distributed ledger technology. Crypto-assets are digital representations of value or of rights that have the potential to bring significant benefits to market participants, including retail holders of crypto-assets. Representations of value include external, non-intrinsic value attributed to a crypto-asset by the parties concerned or by market participants, meaning the value is subjective and based only on the interest of the purchaser of the crypto-asset.
In light of the recent legal cases and lawsuits against companies from the cryptocurrency industry, the US Commodity Futures Trading Commission (CFTC) filed a suit against world’s biggest cryptocurrency exchange Binance. The Binance exchange, and the company CEO Changpeng Zhao are accused of trading violation, by not registering with the US regulatory body.
Binance
The commission has been investigating the online exchange since 2021 and this is a final step in their investigation. The CFTC claims that Binance also allowed US citizens to buy and trade cryptocurrency on its platform, back in 2017. Currently, the US citizens are not allowed to trade on the exchange which implements Know Your Customer (KYC) procedure. The companies CEO Changpeng Zhao is accused of having numerous accounts on the exchange which he used to trade against their customers.
The Binance exchange started in Shanghai and it now holds companies in a couple of world jurisdictions, with a yearly revenue of $20 billion. Mr Changpeng Zhao has Canadian and Chinese passports, while living in Dubai.
According to a report from Reuters, the world’s largest payment processor companies, Visa and Mastercard, are pushing back the launch of products and services related to crypto, until market conditions and the regulatory environment improve. Visa and Mastercard already have a card issued in partnership with the cryptocurrency exchange Binance, and it offers a fiat-to-cryptocurrency gateway for Binance users.
Anyhow, companies shared concerns about the future of cryptocurrency regulation in a midst of the recent collapse of large players in the crypto industry, such as the FTX. A hard year for crypto companies, pushed Visa and MasterCard to delay the proposed partnerships and decide the way forward after a clearer regulation perspective is established.
At the outskirts of the G20 summit in India, the International Monetary Fund Managing Director, Ms Kristalina Georgieva answered the questions from media around the cryptoassets and digital currencies. In her words, the IMF is very much in favor of regulating the world of crypto and digital money. The IMF, alongside the Bank for International Settlements and the G20s Financial Stability Board (FSB) believes this is a top-priority in the forthcoming period.
She pointed out the difference between legal tenders (national currencies) which are backed by countries that issue them, and the ‘publicly issued cryptoassets and stablecoins calling them ‘just a speculative asset’. If such assets start to pose a threat to the consumers and/or financial stability for countries we should have a mechanism to ban crytpoassets altogether. We have requests from our members not to rule out the mechanism for the total ban. If there are strong consumer protection laws set in place, we will not need a ban. The ban of cryptocurrencies is indeed a tool of last resort, she added in her interview.
This action comes after Paxox received a notice from the US Security and Exchange Commission (SEC) that BUSD stablecoin is a financial security and that Paxos needs to register with the Commission. Stablecoins are cryptocurrencies that are pegged to the US dollar or other national currency. The regulatory battle around the stablecoins will continue as Paxos complained to the decision from the SEC. Meanwhile, all deposits of the BUSD will be halted. BUSD is a stablecoin used on a cryptocurrency exchange Binance as a stablecoin pegged to the US dollar. The Binance online exchange is the world’s second largest cryptocurrency exchange based. Binance announced that this will not affect their business.
Stablecoin regulation will be on the agenda of the G20 Finance Ministers meeting on February 24-25 in India. Regulation around this issue might need an overarching regulatory approach.
With the overall goal of identifying deceptive marketing practices across the digital economy, the ACCC plans to analyse influencer marketing practices across several social media platforms such as Instagram, TikTok, Snapchat, YouTube, Facebook, and Twitch. The authority is also looking at the role that other parties such as advertisers, marketers, brands, and social media platforms may have in facilitating misconduct.
Google has committed to introducing changes to better inform consumers about their purchases via Google Store, Google Play Store, Google Hotels, and Google Flights, as a way to comply with relevant consumer protection rules in the EU. The commitment results from a joint action by European regulators, led by the Nederlands Authority for Consumer & Market and the Belgian Competition Authority.
• more precise information on final prices on Google Hotels and Google Flights; • limitation of Google’s right to unilaterally cancel orders or change prices in the Google Store; • more accessible report for regulators regarding illegal content; • make it easier to consumers to find out information about sellers in Google Store and Google Play Store; • feature the option to make purchases using all EU payment methods in Google Store; • improve the application of geo-blocking rules enabling consumers to download their apps anywhere in the EU.
The Consumer Protection Cooperation Network (CPC) will monitor the implementation of these adjustments and commitments, while the EU national authorities will track and enforce compliance where concerns remain.
