The governments have been seeking to regulate cryptocurrencies since Bitcoin started to gain popularity after 2013. Approaches and timelines of crypto regulations vary from country to country, but by now, nearly all governments issued at least one or several statements on how to deal with crypto.
Let’s explore the history of regulation attempts in the US, EU and Asia.
The US: Step By Step Regulation
The United States embrace the approach of what they call reasonable regulation. This means adapting and applying the existing legal framework to cryptocurrencies rather than setting up special crypto laws.
The US government doesn’t take centralized crypto decisions, leaving the regulation to its member states. The regulation is built on statements from state agencies such as the Securities Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC) and the Internal Revenue Service (IRS).
Timeline:
2014 — IRS issues the first guidance for taxation of cryptocurrencies (e.g. Bitcoin), explaining how to apply general tax principles.
2017 — US becomes the first country to regulate initial coin offerings (ICOs) through SEC.
2018 — IRS sets up a taskforce to combat tax crime and money laundering through digital currencies.
2022 — Stablecoins become well-regulated on demand by US financial companies.
2022 — Broader crypto regulations are work-in-progress.
The EU: Partly-Regulated Crypto Market
The European Union has taken a number of significant steps towards crypto regulation during the last few years. However, each of 28 EU states has different specifics and opinions, which slows down regulation on the whole.
Timeline of key events:
2014 — Germany becomes the first European country to accept Bitcoin as a currency.
2015 — Sweden authorizes trading of two Bitcoin exchange traded notes.
2018 — EU lawmakers agree on the Anti-Money Laundering Directive to tackle the problem of money laundering, tax evasion and fraud with cryptocurrencies.
2018 — Malta and Switzerland pass bills especially designed for cryptocurrencies and blockchain technology.
2022 — EU approves the Markets in Crypto-Assets Regulation (MiCA Directive) as a global attempt of comprehensive crypto regulation. It’s still work-in-progress.
Asia: Crypto Regulation Contrasts
Speaking about cryptocurrencies in Asia, we can see completely different regulatory approaches in China and the rest of the region. In 2013, China was the main driver of Bitcoin’s price and was a true cryptocurrency pioneer. However, it quickly changed its course by imposing multiple bans on digital assets and mining.
Timeline for China:
2014 — Chinese regulators impose strict rules on cryptocurrencies, ordering banks to close accounts which included them.
2017 — Prohibition of ICOs and crypto exchanges.
2021 — Ban imposed on Bitcoin & other currencies mining.
At the same time, South Korea, Japan and Singapore have followed consistent policies towards digital currencies. South Korea failed to ban crypto-related activities
and took its stance for regulatory developments of the industry. In 2017, Japan allowed merchants to accept bitcoin as a payment and in 2018 set up a government-backed research group.
In Singapore, cryptocurrency exchanges and trading have been legal since 2017, and the city-state has taken a friendlier position on the issue than some of its regional neighbors.
What’s next?
Taking into consideration the ongoing growth of DeFi and crypto-related businesses, we can expect further regulatory measures across the world. These will include rules of funding, refunding, investing, taxation and other processes with digital assets that are missing clarity.
To make regulation seamless and really beneficial to cryptocurrency users, governments should involve experts and crypto firms in discussion and decision-taking.