Rethinking Global Crypto Regulation with the World Economic Forum

Written by:Conrad Eliott

Compiled by: TaxDAO

The World Economic Forum (WEF) published the white paper “The Road to Crypto-Asset Regulation: A Global Approach” in May 2023. Since then, the World Economic Forum has continuously updated its research results to keep up with the response of different countries and economic regions to the introduction ofcryptocurrencyWay to bring challenges.

1. Why does the World Economic Forum White Paper recommend a global framework for regulation?cryptocurrency?

As stated in the Data Policy andBlockchainAs expert Arushi Goel points out: “Like some other emerging technologies, regulating this ecosystem (crypto assets) is like walking a tightrope - it requires a delicate balance between preventing harm, protecting users, and promoting innovation.”

In recent years, the crypto industry and the technology behind it, which has great potential, have flourished. When the borderless nature of crypto assets conflicts with the traditional economic and social order, it becomes necessary to implement a unified regulatory framework. However, this also faces many challenges.

2. Challenges facing global cryptocurrency regulation

Different jurisdictions do not have a unified definition, classification and taxation system for the crypto asset market. Participants in crypto transactions are often troubled by misunderstandings of relevant concepts and systems, and lack a thorough understanding of financial risks.

Arbitrage refers to the practice of buying cryptocurrencies from one entity and selling them to another almost immediately. The aim is to profit from marginal price differences between different jurisdictions that have different regulations and have independently developed financial frameworks. This, of course, is a headache for regulators in different jurisdictions, who have to apply different tax laws and legislative guidelines to such transactions. This further hinders the development of overall regulation of the crypto ecosystem.

Inadequate coordination among multiple law enforcement agencies hinders oversight and regulation of the crypto industry and the creation of a coherent, consistent regulatory framework.

3. Progress since the release of the World Economic Forum White Paper

In the face of the above challenges, some countries and regions have attempted to develop regulatory frameworks for crypto assets, with varying degrees of success. See the figure below for details.

4. Regions where crypto regulation has made progress

The World Economic Forum noted that since the release of the white paper, crypto regulation in various countries or regions has undergone the following changes:

4.1 Changes in US cryptocurrency regulation

Although the World Economic Forum notes that progress on crypto regulation in the United States is currently stagnant, it has achieved the following:

• BlockchainThe Regulatory Certainty Bill will be assessed by a House of Representatives committee beginning in July 2023 and published in September 2023.

• The U.S. House of Representatives passed the Financial Innovation and Technology for the 21st Century Act (FIT21) in May 2024.

4.2 EURXiaobai NavigationChanges in crypto regulation

• The EU began introducing MiCA in June 2023, becoming the first economic region to develop and implement a comprehensive cryptocurrency regulatory framework.

• The European Securities and Markets Authority (ESMA), the EU’s supervisory and regulatory body, concluded a three-month public consultation on the implementation of MiCA at the end of April 2024.

• The EU expects to fully incorporate MiCA into the economic zone’s crypto regulatory framework in December 2024, and from January 2026, all crypto transaction service providers must verify and disclose the identities of the original senders and beneficial recipients of all transactions, regardless of the transaction amount.

4.3 Changes in UK cryptocurrency regulation

• Entities wishing to trade in cryptocurrencies must register with the UK’s Financial Conduct Authority, while the Bank of England (BoE) has also taken a firm stance on the regulation of stablecoins.

• The Bank of England believes that the new regulations will bring greater convenience to British consumers while preventing financial crime.

4.4 Changes in cryptocurrency regulation in Asia

Asia’s approaches to cryptocurrency regulation vary:

• Japan recognizes cryptocurrencies as legal tender and recently introduced laws aimed at combating money laundering.exchangeTransaction identification rules.

• South Korea passed the Virtual Asset User Protection Act, seeking to make cryptocurrency transactions moreSafety, which came into effect on July 19, 2024.

• India lifted its ban on cryptocurrency trading in 2020, but regulatory progress has stalled since then. However, India's Cryptocurrency and Official Digital Currency Regulation Bill is promising.

Meanwhile in South America, Brazil adopted crypto regulatory measures in June 2023.

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