2024 is a special and critical year for global blockchain regulation, with the initial improvement of the regulatory framework for the cryptocurrency industry and the integration of crypto assets into the mainstream financial system.
The approval of Bitcoin and Ethereum ETFs in the United States has propelled cryptocurrencies towards mainstream adoption. At the same time, the new U.S. government led by Trump is about to take office, and the new Chairman of the Securities and Exchange Commission (SEC) Paul Atkins will take office, indicating that compared with the previous SEC's "enforcement based supervision" model, the U.S. regulator may adopt "disclosure based supervision" in the future, and set up a White House director of artificial intelligence and cryptocurrency affairs for the first time. It also heralds a more friendly, flexible and innovative crypto regulatory policy.
In Europe, the stablecoin Regulation Act, the Crypto Asset Market Regulation (MiCA), officially came into full force, and crypto companies accelerated stablecoin competition. In Asia Pacific, Hong Kong approved the Bitcoin and Ethereum spot ETFs in April, adding four new members to the virtual asset exchange. In terms of stablecoins, Hong Kong has introduced stablecoin sandboxes and stablecoin bills.
In other parts of Asia, such as Vietnam, the government has released a National Blockchain Development Strategy. In Russia, cryptocurrency mining regulations came into effect. In addition, in the Middle East and North Africa and the Americas, the United Arab Emirates, Qatar, and Argentina have also demonstrated positive policy innovation when it comes to cryptocurrency regulation.
At the end of the year, PANews took stock of important regulatory developments in the global crypto market, and under different regulatory regimes in different places, the crypto market will take on a completely different look next year.
Us: BTC and ETH spot ETFs approved in anticipation of new administration regulation
On January 10, 2024 local time, the U.S. Securities and Exchange Commission (SEC) approved the spot Bitcoin exchange-traded Fund (ETF), followed by the approval of the Ethereum ETF in a "180-degree" reversal on May 23 local time. On July 23, the Ethereum spot ETF in the United States was officially traded. Two events marked a major milestone in the crypto investment space in the United States. The Bitcoin ETF and Ethereum ETF provide a scalable bridge between traditional finance and cryptocurrencies, becoming a key integration point.
According to SoSoValue data, as of December 23 local time, the total net asset value of the US Bitcoin spot ETF was $105.08 billion, accounting for 5.7% of the bitcoin market value. The total net asset value of the Ethereum spot ETF in the United States is $12.05 billion, accounting for 2.94% of the market value of Ethereum. The successful start of the approval of the two ETFs has enabled the application of more altcoin ETFs, such as Solana, Doge, and XRP ETFs, further promoting the maturity of the crypto asset market.
During the year, two important bills on crypto regulation in the United States were also worth watching. On May 22, 2024, the U.S. House of Representatives approved the 21st Century Financial Innovation and Technology Act (FIT21), which aims to clearly define cryptocurrencies, classify specific cryptocurrencies to determine whether they are securities or commodities, and determine which government agency (SEC or CFTC) will regulate them. It is still in progress.
On June 1, US President Joe Biden vetoed another regulation, SAB 121, which aims to overturn the accounting standards set by the announcement for companies hosting cryptocurrencies, and may also change in the New Year with the coming of the new administration, but also to facilitate the adoption of cryptocurrencies by more large companies.
After the US election, the new administration led by Donald Trump is expected to open up a new model of crypto regulation. Trump, who supports cryptocurrencies, elected a number of pro-cryptocurrency politicians to key positions in his selection of his new administration. For example, on December 5, Trump formally nominated Paul Atkins to be chairman of the SEC. On December 6, Trump announced the appointment of David Sacks as White House Commissioner for Artificial Intelligence and Cryptocurrency, the first time the position has been created. On December 23, Bo Hines, a 29-year-old political newcomer, was named executive director of Trump's crypto Council. On December 13, French Hill was elected chairman of the House Financial Services Committee. This series of appointments foreshadows the possibility of a more friendly U.S. policy in the crypto regulatory space in the future.
Europe: The entry into force of the MiCA Act and increased stablecoin competition
The regulation of stablecoin issuers under the European Union's Crypto Asset Markets Regulation Act (MiCA) came into force on June 30 and was fully implemented on December 30. MiCA is the EU's first complete regulatory framework for the crypto industry, with specific requirements for the regulation of stablecoins. While some crypto companies say they are not yet fully prepared, competition in the European stablecoin market is set to intensify against the backdrop of increasingly stringent compliance requirements. For example, Tether, which is not licensed, has invested in Dutch company Quantoz and European StablR.
In addition, the UK's Financial Conduct Authority (FCA) has also said it wants to introduce a comprehensive regulatory regime for cryptocurrencies by 2026. A study commissioned by the FCA shows that holdings of crypto assets have grown by 4% over the past two years, with around 7 million adults holding crypto assets out of a population of around 68 million in the country.
On December 21, the German Parliament passed the Financial Market Digitization Act required for the full implementation of crypto MiCA.
Hong Kong: Four new VATP licensees to promote the development of stablecoins
On October 31, 2022, Hong Kong officially issued the virtual asset policy Declaration, and today, Hong Kong Web3 companies have approached 1,000.
At the end of April, Hong Kong licensed six virtual currency ETFs owned by Huaxia Hong Kong, Boshi International and Harvest International. Although it faces stiff competition from similar products overseas and the volume of transactions needs to be improved, they mark Hong Kong's key position in the global crypto regulatory system.
On July 18, the Hong Kong Monetary Authority announced the first batch of three "sandbox" participating institutions, including Jingdong Coin Chain Technology, Yuan Coin Innovation Technology, and the joint application of Standard Chartered Bank (Hong Kong) Animoca Brands Limited (Animoca Brands Limited), Hong Kong Telecommunications (HKT), The three institutions can test the expected business model within the specified scope and communicate with the HKMA on how to comply with the proposed stablecoin regulatory regime in future. Hong Kong's Virtual Currency Licence (VATP) regime has further promoted the development of compliance for crypto asset service providers. On 18 December, after OSL Exchange, HashKeyExchange and HKVAX, VATP Hong Kong welcomed four new members, including Cloud Account Greater Bay Area Technology (Hong Kong), DFX Labs, Hong Kong Digital Asset Trading Group and Thousand Whales Technology.
On December 6, the Hong Kong government unveiled the Stablecoin Bill, a long-awaited legislative initiative that lays the foundation for comprehensive regulation of stablecoins (FRS) that anchor fiat currencies. In the future, under the legal and compliant regulatory framework, Hong Kong is likely to issue a stablecoin, which can be widely used in investment, trade, payment and many other scenarios.
Elsewhere in Asia Pacific: Further advances in Web3 policy and sandbox regulation
On November 27, Japan's new Digital Minister Masaaki Taira announced at a forum that the country's Prime Minister Shigeru Ishiba has reorganized his party's Web3 and crypto policymaking departments to further promote the country's policy innovation in crypto and blockchain. The government said it had no intention of preventing the "promotion" of Web3-related businesses. The project is the brainchild of former Prime Minister Fumio Kishida, who resigned as prime minister and leader of the Liberal Democratic Party earlier this year. Ishiba has said he also supports pro-Web3 policies. Japan's Liberal Democratic Party (LDP) is pushing for cryptocurrency tax reform. The proposed reforms include the application of a separate 20 percent tax rate on cryptocurrency trading profits and the introduction of a loss carryforward system. Currently, cryptocurrency profits in Japan are classified as miscellaneous income, which can be taxed at a maximum rate of 55 percent.
In South Korea, on July 19, the country introduced the Virtual Asset User Protection Act, which aims to enhance investor protection and ensure the future development of the market. But soon after the new regulation was implemented, the political situation in South Korea became volatile, with the National Assembly of South Korea deciding to suspend all regulatory discussions related to cryptocurrencies in the wake of martial law and plans to impeach the current president.
At the same time, countries such as Indonesia, Thailand, and Vietnam are also increasing their regulation of crypto markets, notably with the introduction of sandbox frameworks that allow innovative projects to experiment in a lightly regulated environment. Specifically, the Indonesian Financial Supervisory Authority (OJK) launched the Sandbox framework in June 2024. In August 2024, Thailand's SEC introduced a digital asset sandbox that complements its existing detailed licensing framework. Allow testing of key initiatives in line with emerging market trends. On October 22, the Vietnamese government announced its National Blockchain Development Strategy, which aims to make Vietnam a leading regional hub for blockchain technology research, application and innovation by 2030.
India's unfriendly regulatory policies towards the crypto market are also showing signs of easing. In January this year, the apps of exchanges such as Binance and Kraken were blocked by India's Financial intelligence agency and removed from the Apple APP Store in India because they did not comply with India's anti-money laundering rules. But in May, Binance, along with KuCoin, became the first offshore crypto-related entity to receive approval from India's Financial Intelligence Unit (FIU) on condition that it pay a fine after a hearing with the FIU.
Russia: Cryptocurrency mining regulations come into force with digital currency tax adjustments
Russia's comprehensive cryptocurrency mining regulations came into effect on November 1, 2024, setting out strict energy caps, mandatory registration, and regulatory requirements, bringing a clearer legal framework to the industry. The new regulations officially include cryptocurrency mining as a legal activity and set safety and operational standards for miners, while requiring the trading of digital financial assets on specific platforms. The regulation aims to balance the growth of the Russian crypto industry, energy needs and controls on illegal mining.
According to the new regulations, only registered enterprises and individual entrepreneurs can legally engage in crypto mining activities, while unregistered individual miners must not consume more than 6,000 kWh of electricity per month, and those who exceed it need to register as entrepreneurs to continue mining. In addition, on November 29, Putin signed a new digital currency tax bill that explicitly considers digital currencies as property, exempts them from value-added tax, and provides tax-free treatment for cross-border settlements. Still, mining service providers are required to report user information to tax authorities, and those who fail to do so will face fines.
On December 4, Putin said at the Russia Calling Investment Forum that it is impossible to ban the development of digital payment instruments such as bitcoin, stressing that the future of these new technologies will continue to move forward.
Middle East and North Africa: The rapid growth of the cryptocurrency market
In the Middle East and North Africa, the UAE's cryptocurrency ecosystem is growing rapidly, thanks to regulatory innovation, institutional interest, and expanding market activity. The Dubai Virtual Asset Regulatory Authority (VARA), established in 2022, provides the world's leading regulatory framework for the crypto industry and drives its further development. At present, 23 platforms have obtained VARA licenses, and 13 new licenses have been issued this year, including Binance, Bybit, OKX, Derbit and so on.
Saudi Arabia continues to be the fastest growing cryptocurrency economy in the MENA region, with a 154% increase in total on-chain value compared to last year, according to Chainalysis. This rapid growth is due to the country's continuous development in areas such as blockchain innovation, central bank digital currency (CBDC), gaming industry and fintech.
It was followed by Qatar as the second fastest growing cryptocurrency market in the region in terms of on-chain value, with the government of Qatar once banning the trading of crypto assets, but the current regulatory policy is also improving. The Qatar Financial Center (QFC) launched a new regulatory framework for digital assets in September this year, including five aspects of digital asset definition, market access and compliance requirements, technical standards and security, consumer protection and education, international cooperation and standardization, laying a legal and regulatory foundation for the development of digital assets.
South Africa, the friendliest country in Africa, has issued 248 licences
Among African countries, South Africa is one of the most crypto-friendly. The South African Reserve Bank (SARB) has not explicitly banned the use of cryptocurrencies.
As of December 16, 2024, South Africa's Financial Industry Conduct Authority (FSCA) has issued 248 crypto asset Service provider (CASP) licences out of 420 applications received. According to a local report, 56 applications are still under review, while nine have been rejected. In addition, the report noted that 106 organizations withdrew their applications after the FSCA raised questions about the business models of some companies.
The Americas: National Policy Innovation in cryptocurrencies
In the Americas, Argentina is making a big push for cryptocurrency adoption. On October 22, Argentina's Securities Regulator (CNV) announced a public consultation on a draft that seeks to regulate the operation of virtual asset service providers (VASPs) in the country and impose new compliance requirements on these institutions. At the same time, Argentina's securities regulator announced that it would allow foreign investment products related to multiple crypto ETF opportunities to enter the market. President Milley plans to implement a free currency circulation policy in 2025, allowing Argentines to trade in any currency of their choice, including Bitcoin, providing new opportunities for economic diversification.
Brazil has established friendly regulations, has great potential to develop RWA (real world assets), a diverse and vibrant community, and has a CBDC (called DREX) in the pilot phase.
In El Salvador, where bitcoin is legal tender, the government encourages adoption and incentivizes cryptocurrency tourism. On December 11, El Salvador signed an agreement with Argentine regulators to help develop the crypto industry in both countries.
Conclusion:
Overall, the 2024 bull market is undoubtedly a pivotal year for the global cryptocurrency and blockchain industry in terms of compliance. Although crypto companies and practitioners still face certain uncertainties and challenges under the evolving regulatory framework, the overall picture is positive and cryptocurrencies are moving towards mainstream financial systems and mass adoption. Looking ahead to 2025, how to balance regulation and innovation, as well as strengthening coordination and communication between the industry and regulation, will become the key to the future development of the crypto industry.