Currently, several countries around the world, such as the United States, the United Arab Emirates and the Philippines, are preparing new regulations applicable to the digital and cryptocurrency industry, in order to ensure healthy and responsible development of new markets.
As the development of the cryptocurrencies, and digital assets in the world, more countries are joining the initiative to regulate the digital industry, as an effective way to prevent digital assets from being used in illicit activities that risk the security of nations, investors and users in general.
Countries such as the United Arab Emirates and the Philippines are preparing new regulations and standards applicable to this industry, while in the United States there is debate about the need to define and strengthen existing regulations.
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Dubai, a financial hub for digital assets
In the case of the United Arab Emirates, Dubai, one of the most luxurious cities and where the greatest commercial activity takes place in this country, is preparing a new regulation for cryptocurrencies through the Dubai Financial Services Authority, the DFSA. This entity recently published its Business Plan 2021-2022, which includes a regulatory proposal for the crypto industry.
Since 2018, the country has been implementing regulations applicable to the cryptocurrency industry, to ensure the responsible provision of financial services by companies, exchanges and digital asset exchanges. Also, in 2019, the Central Bank of Bahrain implemented a series of rules that govern the way in which these companies can provide financial services with crypto assets within its territory. Now, to expand and strengthen the industry, the DFSA is preparing to include new regulations that favor the growth of the industry and its participants. In its regulatory proposal, the authority includes the possibility of “to enable small and medium-sized enterprises (SMEs) to raise capital through the listing of shares and debt in the DIFC”, the Dubai International Financial Centre.
Greater compliance in the crypto industry
The authority is conducting two public consultations in order to obtain citizens' opinions on its regulatory plans applicable to a wide range of cryptocurrencies and digital assets. These, according to explained a city news outlet, covering the entire spectrum of tokenized assets in blockchain, such as security tokens and utility tokens; in addition to all payments and commercial operations carried out with cryptocurrencies in the territory.
The head of strategy, policy and risk at Dubai's Financial Services Authority, Peter Smith, explained that digital markets and their assets must be regulated in a proportionate and thoughtful manner, to ensure the provision of efficient services to users, clients and investors. The official also said that the regulatory proposals that the authority is presenting for the crypto industry in Dubai were designed in accordance with regulatory “best practices” presented in other parts of the world.
One of the public consultations being carried out by the authority will be completed at the end of the first quarter of 2021, and the second, during the second quarter.
Philippines strengthens its AML regulations
In the Philippines, the Bangko Sentral ng Pilipinas (BSP), the country's central bank, believes that cryptocurrencies and digital assets have the potential to revolutionize the provision of financial services, and so it considers it necessary to strengthen its regulations for the crypto industry to ensure a healthy environment that safeguards the integrity and stability of the system and its investors. To protect the country against illicit activities, such as money laundering, the entity is implementing a series of standards established by the Financial Action Task Force (FATF) within the services offered by the Digital Asset Service Providers (VASP).
In a Valid identity document In a recently published document, the country stipulates that VASPs will need to be duly licensed by the competent authorities to provide financial services with crypto assets; furthermore, these service providers will also be subject to existing rules and regulations of central banks, which regulate areas of the financial industry such as liquidity, operational risk, consumer protection and AML.
The central authority is also establishing minimum capital requirements for these service providers, which are based on the activity they offer, to ensure the protection of investors and consumers.
Russia, one of the largest markets for cryptocurrencies
Un report Posted by blockchain intelligence firm Chainalysis, lists Russia as the second country with the highest adoption and use of cryptocurrencies and digital assets. This nation is implementing a series of regulations that favor the use of these assets, although, on the other hand, it completely prohibits them for certain types of activities.
Still, despite the strict controls on digital assets that came into effect on January 1, 2021 in Russia, citizens of this country are among the most interested in acquiring cryptocurrencies. For this reason, Anatoly AksakovLeader Financial Markets of the Russian State Duma, notes that for this 2021 the country may see the arrival of new regulations for the crypto industry, which focus on aspects such as taxes and mandatory reporting. It is worth mentioning that the Russian government is already implementing decrees which establish the declaration of cryptocurrency holdings for public officials at any level; in addition to other regulations prohibiting certain officials from holding cryptocurrency in foreign accounts.
United States, a fight for global technological leadership
In the United States, regulators and lawmakers are proposing new regulations for the digital industry, saying they are necessary to ensure the country's financial stability and national security.
The most recent case is the proposal presented at the end of December 2020 by the United States Department of the Treasury, and its affiliated entity, the Financial Crimes Enforcement Bureau (FinCEN). In this proposal, the regulator presented the need to control cryptocurrency transactions that are carried out from Wallets or self-hosted self-custodial wallets, as an effective way to prevent illicit activities. However, the strong regulatory proposal did not have a friendly reception from the crypto community, and many companies involved in this industry, including Chainalysis, who expressed great concern about the potential risk which represents centralizing data and private and financial information of the millions of users who make transactions from this type of wallet; in addition, the undermining that the approval of this law represents for the technological leadership of the United States.
At the time of this publication, the crypto community managed to get the regulator extended the period for analysis and evaluation of this proposal for an additional period of 60 days, in order to assess all the risks and advantages involved in the approval and implementation of this proposed law.
Hawaii is driving blockchain adoption
However, in contrast to the Treasury's claims, legislators in the state of Hawaii are pushing for new regulations that seek to promote the potential of blockchain technology, to stimulate its use, adoption and implementation as a fundamental element for the economic development of the state.
The recent proposal The state of Hawaii is seeking approval to create a Blockchain Working Group, which will have the power to make recommendations on the use and adoption of this technology. Hawaii state legislators believe that the potential of blockchain technology can be of great benefit to the development of high-end government and public sector applications and security.
The potential of new technologies and regulators
The new US administration published a memorandum where he ordered a freeze on all regulatory proposals submitted by former President Donald Trump, including those related to the digital industry; an action that is giving industry participants some breathing room.
Likewise, the appointment of Janet Yellen As the new Treasury Secretary, the crypto community is being filled with optimism, especially after the official declared that Bitcoin and cryptocurrencies can bring great benefits to improve the efficiency of the current financial system. Although Yellen defends the need for regulation to prevent financial crimes with digital assets, her recent statements show what seems to be a change of stance more open and favorable to the development of the industry.
Mixed Opinions on Bitcoin
On the other hand, according to the investment expert and CEO of Goldman Sachs, Lloyd Blankfein, the growing boom, interest and development of the digital industry can overshadow the power of regulators and legislators over this industry. Blankfein said The privacy potential offered by Bitcoin makes it perfect for carrying out illicit activities; although it is worth remembering that many companies and analysis firms specialized in blockchain and cryptocurrencies label Bitcoin as a blockchain with great transparency potential, which is not conducive to carrying out illicit acts. In addition, government agencies such as the United States Department of Justice have been able to trace transactions with bitcoins associated with terrorist groups, dismantling their sources of financing and seizing their resources thanks to the transparency of this pseudo-anonymous cryptocurrency.
In contrast to Blankfein's views, the well-known investor “Bill Four”, son of the famous fund manager and philanthropist Bill Miller, highlighted in a letter the full potential of Bitcoin, as a cryptocurrency and as an electronic cash system, emphasizing that anyone who does not have investments in this cryptocurrency is making a big mistake.
Favorable regulations for the development of the industry
Despite the different positions of US regulators and legislators regarding cryptocurrencies and digital assets, and the denial of many influential people about the future of this industry, the United States has favored much of its development in recent years. The actions of the Office of the Comptroller of the Currency (OCC), under the leadership of Brian brooks, made the crypto space flourish in less than a year, leading commercial banks to provide financial and custody services with digital assets, and even authorizing them to operate their own nodes for the control of payments and other activities within stablecoin networks, known as stablecoinsThe United States also played a key role in the creation of the first crypto banks in the country.
Likewise, other agencies such as the Commodity Futures Trading Commission (CFTF) The bank also helped the growth of the industry to a certain extent. In 2018, the bank authorized its employees to manage cryptocurrencies and approved the entry of Bitcoin derivatives and other cryptocurrencies into regulated markets.
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