Regulation

Entry into force of the law on cryptocurrencies: prepare for a journey strewn with pitfalls

Published

5 months ago

24 June, 2024

Entry into force of the law on cryptocurrencies: prepare for a journey strewn with pitfalls

Brussels’ new legislation aims to end the scams and unrest that have characterized markets like bitcoin, but few, if any, appear willing to comply.

The EU’s landmark crypto regulations come into force this week – and it doesn’t appear that any major specialist players have managed to secure authorization.

The new regime offers players such as exchanges and wallet providers the opportunity to apply for a license that will allow them to operate across the bloc.

Brussels has boasted of being the first global jurisdiction to establish tailor-made rules for the cryptocurrency market – a market that has seen significant turbulence and manipulation.

But with time running out, the jury is still out on whether Europe’s Crypto Asset Markets Act, MiCA, heralds a new era for the industry – or whether it will kill it altogether.

After passing the law in June 2023, French Finance Minister Bruno Le Maire said this landmark legislation “will prevent the misuse of crypto-assets, while being supportive of innovation to maintain the attractiveness of the EU”.

A few months later, top lawmaker Stefan Berger (Germany/European People’s Party) said the rules “place the European Union at the forefront of the token economy worldwide.”

Many cryptocurrency users have long welcomed its independence from government control, although some recognize that regulatory recognition could provide additional credibility and certainty.

As the prospect of implementing financial-type rules draws ever closer, the mood in the sector is becoming increasingly anxious.

Difficult and uncomfortable

“It’s a difficult and uncomfortable time,” Faustine Fleuret, president of French crypto lobby group ADAN, told Euronews, citing standards that are both strict and unclear.

This sadness is shared by Marina Markezic, founder of the Brussels-based European Crypto Initiative, who points out that many crypto companies still have not explained to their customers exactly how the law will work.

On June 3, Binance, one of the world’s leading crypto exchanges, said it would restrict access to unauthorized crypto coins once MiCA goes into effect, but others have not been so outspoken, she declared.

“There is a week left until June 30 and I, as a consumer, still don’t know what is going to happen,” Markezic said.

A large part of MiCA is dedicated to stablecoins – crypto assets that seek to tie their value to other assets, such as the price of gold or the US dollar.

These are the strictest parts of MiCA and the first to come into force – other provisions, such as exchange licenses, come into force on December 30.

But there is still debate over what the rules actually mean – for example, whether managing stablecoins means you have to register as a payment provider, Fleuret says.

Short notice

Worse still, Fleuret says, the European Banking Authority (EBA) only published its final set of technical standards last week, leaving operators little time to prepare.

“Less than two weeks before a big, big piece of the MiCA regulation came into effect, the people who have to comply didn’t even have all the operational details they needed to become compliant,” she declared.

“For new arrivals, it’s really much more complicated to be ready by June 30, if not impossible,” she said – although admitting that existing approved payment providers might be in a better position.

An EBA spokesperson told Euronews that the European agency had finalized and published the 18 sets of standards and guidelines before the June 30 deadline.

“The EBA called on the industry to prepare in a timely manner” for the new stablecoin regime and proposed a tool for companies to resolve questions of interpretation, the spokesperson added.

No approval?

Confirming Fleuret’s analysis, Euronews has not identified any major crypto players definitively approved by the MiCA.

Last April, Paolo Ardoino, CEO of stablecoin issuer Tether, said he was “still talking with the regulator” about his concerns about the law. Circle, whose euro-backed stablecoin appears aimed at EU users, announced last year that it had applied for a MiCA license.

With a week to go, neither company has publicly announced that it has received regulatory approval; neither responded to Euronews’ request for comment.

Markezic and Fleuret remain positive on certain aspects of MiCA, which will notably allow crypto companies to operate throughout Europe with a more or less clear framework.

But Fleuret fears that the law is not adapted to small players who tend to dominate the space.

“The problem with MiCA is that it is not proportionate,” she said. “If you are a startup trying to launch a business into the market now, you will have to apply the same rules as Société Générale,” a French bank that is also moving into fintech.

And for all the EU’s bluster about promoting innovation, difficult hurdles seem to be a feature rather than a bug.

The big technological fears

Those who created MiCA were motivated in part by fears that Facebook might issue its own form of currency, Libra, tied to a basket of major global currencies.

Finance ministers have spoken out against the idea of a major foreign tech giant creating a currency that could supplant the euro.

Facebook’s project collapsed, partly because of political backlash, but regulators’ fears were confirmed in the spring of 2023, when Terra, a stablecoin meant to maintain its value against the US dollar, fell under pressure of the market, leading to the downfall of a large part of the crypto ecosystem. with that.

The final version of MiCA imposes strict reserve requirements on euro-based stablecoins, and a cap of one million daily transactions for others.

But this could clash with existing provisions, as operators do not always monitor this information, says Markezic.

“Issuance occurs globally, and there was previously no system to align, implement or review… the amount issued in a specific jurisdiction,” he said. she declared. “Sometimes issuers don’t know who owns these tokens.”

A few difficult years

Crypto has had a rough few years. Following the Luna crash, there was a period of turmoil and regulatory backlash, and many of the industry’s leading figures are now in prison.

In the United States, Sam Bankman-Fried was recently sentenced to 25 years in prison after pleading not guilty to fraud and money laundering while running the doomed crypto exchange FTX.

Similarly, Changpeng Zhao, the founder of Binance, was sentenced to four months in prison after pleading guilty to money laundering.

All of this may have tarnished crypto’s reputation, but Markezic is confident that legal credibility could herald a new era.

Established providers such as banks were “waiting for regulation,” she said, with a clear rulebook that could move the technology out of its current, somewhat cheesy, niche.

“I think we’ll talk less about technology and less about stablecoins and… more about utility and what it can bring to the consumer,” she said. “There are many benefits when it comes to transparent transactions, 24/7 processes, etc. »

But even she acknowledges that there will be obstacles on the path between today’s Wild West and mainstream credibility.

“Many businesses will not have the capacity to comply,” she said. “Very small startups and innovative companies will likely limit their activities in the EU.”

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Related Topics:cryptocurrency EU politics European Commission Financial regulation

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We are the editorial team of Blockchainbulletin, where seriousness meets clarity in cryptocurrency analysis. With a robust team of finance and blockchain technology experts, we are dedicated to meticulously exploring complex crypto markets with detailed assessments and an unbiased approach. Our mission is to democratize access to knowledge of emerging financial technologies, ensuring they are understandable and accessible to all. In every article on Blockchainbulletin, we strive to provide content that not only educates, but also empowers our readers, facilitating their integration into the financial digital age.

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Regulation

Crypto community gets involved in anti-government protests in Nigeria

Published

4 months ago

1 August, 2024

BlockChainBulletin Staff

Crypto Community Engages in Nigeria's Governance Protests

Amid the #EndBadGovernanceInNigeria protests in Nigeria, a notable shift is occurring within the country’s cryptocurrency sector. As the general public demands sweeping governance reforms, crypto community leaders are seizing the opportunity to advocate for specific regulatory changes.

Rume Ophi, former secretary of the Blockchain Stakeholders Association of Nigeria (SiBAN), stressed the critical need to integrate crypto-focused demands into the broader agenda of the protests.

Ophi explained the dual benefit of such requirements, noting that proper regulation can spur substantial economic growth by attracting investors and creating job opportunities. Ophi noted, “Including calls for favorable crypto regulations is not just about the crypto community; it’s about leveraging these technologies to foster broader economic prosperity.”

Existing government efforts

In opposition to Ophi’s call for action, Chimezie Chuta, chair of the National Blockchain Policy Steering Committee, presents a different view. He pointed out The Nigerian government continued efforts to nurture the blockchain and cryptocurrency industries.

According to Chuta, the creation of a steering committee was essential to effectively address the needs of the crypto community.

Chuta also highlighted the creation of a subcommittee to harmonize regulations for virtual asset service providers (VASPs). With the aim of streamlining operations and providing clear regulatory direction, the initiative involves cooperation with major organizations including the Securities and Exchange Commission (SEC) and the Central Bank of Nigeria (CBN). “Our efforts should mitigate the need for protest as substantial progress is being made to address the needs of the crypto industry,” Chuta said.

A united call for support

The ongoing dialogue between the crypto community and government agencies reflects a complex landscape of negotiations and demands for progress.

While actors like Ophi are calling for more direct action and the inclusion of crypto demands in protest agendas, government figures like Chuta are advocating for recognition of the steps already taken.

As protests continue, the crypto community’s push for regulatory reform highlights a crucial aspect of Nigeria’s broader fight to improve governance and economic policies. Both sides agree that favorable regulations are critical to the successful adoption and implementation of blockchain technologies, signaling a potentially transformative era for Nigeria’s economic framework.

Read also : OKX Exchange Exits Nigerian Market Amid Regulatory Crackdown

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Regulation

Cryptocurrency Regulations in Slovenia 2024

Published

4 months ago

1 August, 2024

BlockChainBulletin Staff

Cryptocurrency Regulations in Slovenia 2024

Slovenia, a small but highly developed European country with a population of 2.1 million, boasts a rich industrial history that has contributed greatly to its strong economy. As the most economically developed Slavic nation, Slovenia has grown steadily since adopting the euro in 2007. Its openness to innovation has been a key factor in its success in the industrial sector, making it a prime destination for cryptocurrency enthusiasts. Many believe that Slovenia is poised to become a powerful fintech hub in Europe. But does its current regulatory framework for cryptocurrencies support such aspirations?

Let’s explore Slovenia’s cryptocurrency regulations and see if they can propel the country to the forefront of the cryptocurrency landscape. My expectations are positive. What are yours? Before we answer, let’s dig a little deeper.

1. Cryptocurrency regulation in Slovenia: an overview

Slovenia is renowned for its innovation-friendly stance, providing a supportive environment for emerging technologies such as blockchain and cryptocurrencies. Under the Payment Services and Systems Act, cryptocurrencies are classified as virtual assets rather than financial or monetary instruments.

The regulation of the cryptocurrency sector in Slovenia is decentralized. Different authorities manage different aspects of the ecosystem. For example, the Bank of Slovenia and the Securities Market Agency oversee cryptocurrency transactions to ensure compliance with financial laws, including anti-money laundering (AML) and terrorist financing regulations. The Slovenian Act on the Prevention of Money Laundering and Terrorist Financing (ZPPDFT-2) incorporates the EU’s 5th Anti-Money Laundering Directive (5MLD) and aligns with the latest FATF recommendations. All virtual currency service providers must register with the Office of the Republic of Slovenia.

2. Cryptocurrency regulation in Slovenia: what’s new?

Several notable developments have taken place this year in the cryptocurrency sector in Slovenia:

July 25, 2024:Slovenia has issued a €30 million on-chain digital sovereign bond, the first of its kind in the EU, with a yield of 3.65%, maturing on 25 November 2024.

May 14, 2024:NiceHash has announced the first Slovenian Bitcoin-focused conference, NiceHashX, scheduled for November 8-9 in Maribor.

3. Explanation of the tax framework for cryptocurrencies in Slovenia

The Slovenian cryptocurrency tax framework provides clear guidelines for individuals and businesses. According to the Slovenian Financial Administration, the tax treatment depends on the status of the trader and the nature of the transaction.

People:Income earned from cryptocurrencies through employment or ongoing business activities is subject to personal income tax. However, capital gains from transactions or market fluctuations are exempt from tax.
Companies:Capital gains from cryptocurrency-related activities are subject to a 19% corporate tax. Value-added tax (VAT) generally applies at a rate of 22%, although cryptocurrency transactions that are considered as means of payment are exempt from VAT. Companies are not allowed to limit payment methods to cryptocurrencies alone. Tokens issued during ICOs must follow standard accounting rules and corporate tax law.

4. Cryptocurrency Mining in Slovenia: What You Need to Know

Cryptocurrency mining is not restricted in Slovenia, but income from mining is considered business income and is therefore taxable. This includes rewards from validating transactions and any additional income from mining operations. Both individuals and legal entities must comply with Slovenian tax regulations.

5. Timeline of the development of cryptocurrency regulation in Slovenia

Here is a timeline highlighting the evolution of cryptocurrency regulations in Slovenia:

2013:The Slovenian Financial Administration has issued guidelines stating that income from cryptocurrency transactions should be taxed.
2017:The Slovenian Financial Administration has provided more detailed guidelines on cryptocurrency taxation, depending on factors such as the status of the trader and the type of transaction.
2023:The EU adopted the Markets in Crypto-Assets (MiCA) Regulation, establishing a uniform regulatory framework for crypto-assets, their issuers and service providers across the EU.

Endnote

Slovenia’s approach to the cryptocurrency sector is commendable, reflecting its optimistic view of the future of cryptocurrencies. The country’s balanced regulatory framework supports cryptocurrency innovation while protecting users’ rights and preventing illegal activities. Recent developments demonstrate Slovenia’s commitment to continually improving its regulatory environment. Slovenia’s cryptocurrency regulatory framework sets a positive example for other nations navigating the evolving cryptocurrency landscape.

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Regulation

A Blank Sheet for Cryptocurrencies: Kamala Harris’ Regulatory Opportunity

Published

4 months ago

1 August, 2024

BlockChainBulletin Staff

A Blank Sheet for Cryptocurrencies: Kamala Harris' Regulatory Opportunity

photo by Shubham Dhage on Unsplash

As the cryptocurrency landscape continues to evolve, the need for clear regulation has never been more pressing.

With Vice President Kamala Harris now leading the charge on digital asset regulation in the United States, this represents a unique opportunity to start fresh. This fresh start can foster innovation and protect consumers. It can also pave the way for widespread adoption across industries, including real estate agencies, healthcare providers, and online gaming platforms like these. online casinos ukAccording to experts at SafestCasinoSites, these platforms come with benefits such as bonus offers, a wide selection of games, and various payment methods. Ultimately, all this increase in adoption could propel the cryptocurrency market forward.

With this in mind, let’s look at the current state of cryptocurrency regulation in the United States, a complex and confusing landscape. Multiple agencies, including the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Financial Crimes Enforcement Network (FinCEN), have overlapping jurisdictions, creating a fragmented regulatory environment. This lack of clarity has stifled innovation as companies are reluctant to invest in the United States, fearing regulatory repercussions. A coherent and clear regulatory framework is urgently needed to realize the full potential of cryptocurrencies in the United States.

While the US struggles to find its footing, other countries, such as Singapore and the UK, are actively looking into the cryptocurrency sector by adopting clear and supportive regulatory frameworks. This has led to a brain drain, with companies choosing to locate in more conducive environments.

Vice President Kamala Harris has a unique opportunity to change that narrative and start over. Regulation of cryptocurrencies. By taking a comprehensive and inclusive approach, it can help create a framework that balances consumer protection with innovation and growth. The time has come for clear and effective regulation of cryptocurrencies in the United States.

Effective regulation of digital assets is essential to foster a safe and innovative environment. The key principles guiding this regulation are clarity, innovation, global cooperation, consumer protection, and flexibility. Clear definitions and guidelines eliminate ambiguity while encouraging experimentation and development to ensure progress. Collaboration with international partners establishes consistent standards, preventing regulatory arbitrage. Strong safeguards protect consumers from fraud and market abuse, and adaptability allows for evolution in response to emerging trends and technologies, striking a balance between innovation and protection.

The benefits of effective cryptocurrency regulation are multiple and far-reaching. By establishing clear guidelines, governments can attract investors and mainstream users, driving growth and adoption. This can, in turn, position countries like the United States as global leaders in fintech and innovation. Strong safeguards will also increase consumer confidence in digital assets and related products, increasing economic activity.

A thriving crypto industry can contribute significantly to GDP and job creation, which has a positive impact on the overall economy. Furthermore, effective regulation has paved the way for the growth of many businesses such as tech startups, online casinos, and pharmaceutical companies, demonstrating that clear guidelines can open up new opportunities without stifling innovation. This is a great example of how regulation can allay fears of regressive policies, even if Kamala Harris does not repeal the current progressive approach. By adopting effective regulation, governments can create fertile ground for the crypto industry to thrive, thereby promoting progress and prosperity.

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Regulation

South Korea Imposes New ‘Monitoring’ Fees on Cryptocurrency Exchanges

Published

4 months ago

1 August, 2024

BlockChainBulletin Staff

South Korea Imposes New 'Monitoring' Fees on Cryptocurrency Exchanges

Big news! The latest regulatory changes in South Korea are expected to impact major cryptocurrency exchanges like Upbit and Bithumb. Under the updated regulations, these platforms will now have to pay monitoring fees, which could cause problems for some exchanges.

Overview of new fees

In the latest move to regulate cryptocurrencies, the Financial Services Commission announced on July 1 the revised “Enforcement Order of the Act on the Establishment of the Financial Services Commission, etc.” update “Regulations on the collection of contributions from financial institutions, etc.” According to local legislation newsThe regulations require virtual asset operators to pay supervisory fees for inspections conducted by the Financial Supervisory Service starting next year. The total fees for the four major exchanges are estimated at around 300 million won, or about $220,000.

Apportionment of costs

Upbit, which holds a dominant market share, is expected to bear more than 90% of the total fee, or about 272 million won ($199,592) based on its operating revenue. Bithumb will pay about 21.14 million won ($155,157), while Coinone and GOPAX will contribute about 6.03 million won ($4,422) and 830,000 won ($608), respectively. Korbit is excluded from this fee due to its lower operating revenue.

Impact on the industry

The supervision fee will function similarly to a quasi-tax for financial institutions subject to inspections by the Financial Supervisory Service. The new law requires any company with a turnover of 3 billion won or more to pay the fee.

In the past, fees for electronic financial companies and P2P investment firms were phased in over three years. However, the taxation of virtual asset operators has been accelerated, reflecting the rapid growth of the cryptocurrency market and increasing regulatory scrutiny.

Industry reactions

The rapid introduction of the fee was unexpected by some industry players, who had expected a delay. Financial Supervisory Service officials justified the decision by citing the creation of the body concerned and the costs already incurred.

While larger exchanges like Upbit and Bithumb can afford the cost, smaller exchanges like Coinone and GOPAX, which are currently operating at a loss, could face an additional financial burden. This is part of a broader trend of declining trading volumes for South Korean exchanges, which have seen a 30% drop since the new law went into effect.

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