Cryptocurrency Regulations Around the World
Cryptocurrency has evolved from being merely a speculative investment to becoming a recognized asset class. This shift has pushed governments worldwide to explore how to regulate it. While some nations have already developed regulatory frameworks to safeguard users, others are still weighing their options.
Key Points
The increasing role of cryptocurrency in global investments has led to varied regulatory responses. Here’s how countries have approached the issue:
- European Union: The EU became a pioneer in crypto regulation by introducing measures to help service providers detect and prevent illegal cryptocurrency activities.
- United States: The U.S. is taking a slower path to regulation, with users, issuers, businesses, and regulators frequently clashing in court.
- Other Countries: Around the world, cryptocurrencies are treated differently, including in their classification and tax policies.
The United States
In 2022, the U.S. took its first significant step by unveiling a framework for regulating cryptocurrencies. This framework allowed existing market regulators, like the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), to oversee the sector.
The SEC has been actively involved, as shown by its numerous lawsuits against crypto-focused companies such as Ripple, Coinbase, and Binance. These cases target the companies’ products and services, aiming to enforce compliance with federal securities laws.
In 2023, a breakthrough occurred when a district court of appeals ruled that Ripple’s XRP token sales were securities only when sold to institutions, not on exchanges. This marked a partial win for the crypto sector. Later that year, another court decision overturned the SEC’s rejection of Grayscale’s application to convert its Bitcoin Trust into a spot ETF. The court required the SEC to re-evaluate the application, which eventually led to groundbreaking approvals. In January 2024, the first Bitcoin Spot ETFs were introduced, followed by Ethereum Spot ETFs in July 2024.
Despite these developments, the U.S. crypto regulatory landscape remains a battleground. Regulators, broker-dealers, investors, and industry leaders continue to debate the rules, leaving the sector in a state of evolution.
SEC’s Perspective
SEC Chair Gary Gensler has emphasized that approving certain crypto-related ETFs does not signal a broader acceptance of cryptocurrencies. In his words, “Approvals should not imply the Commission’s willingness to approve listing standards for crypto asset securities.” He also reiterated that most cryptocurrencies are considered investment contracts and must comply with federal securities laws.
While ETFs represent progress for the industry, Gensler made it clear that non-compliance remains a significant issue for many market participants. The battle between regulators and the crypto sector is far from over, as the U.S. continues to shape its regulatory framework.
