Cryptocurrency Policies Are Changing Around the World

As cryptocurrencies have become popular over the past few years and the size of the cryptocurrency market is constantly growing, governments around the world face challenges and opportunities related to the management and regulation of crypto assets. In response, each country’s cryptocurrency policies actively adjust to strict regulations or even attempts to ban certain crypto assets entirely. In May 2023, the European Union passed the world's first comprehensive cryptocurrency regulations, known as the Markets in Crypto-Assets Regulation. Recently, cryptocurrency has also emerged as an important issue in the 2024 U.S. presidential election. In this article, the Chonnam Tribune examines cryptocurrency policies taken by some countries based on foreign media reports and looks into how the public can understand crypto asset phenomenon.

Between Regulation and Innovation

The U.S. has been sluggish in the cryptocurrency industry compared to other countries due to strict regulations concerning virtual assets by the Biden administration. However, U.S. national policies also attempt to promote financial innovation and economic growth while regulating the crypto industry, according to The New York Times on May 23. Federal regulators approved an investment product linked to the cryptocurrency Ethereum, the second most valuable digital asset after Bitcoin. A group of exchanges could start listing investment products known as exchange-traded funds (ETFs) linked to the price of Ethereum. Spot ETFs offer a key advantage in that a customer could go online and invest directly in ETFs alongside stocks traded on Wall Street. The Ethereum’s approval would encourage wider use of digital currencies.

Cryptocurrency regulations in the U.S. are expected to be largely dictated by this year's presidential election. Presidential candidate Donald Trump has denounced the Biden administration's efforts to regulate virtual asset industries as a "war on cryptocurrency," according to the BBC on July 28. He has made several cryptocurrency-friendly policy commitments, including the dismissal of Securities and Exchange Commission Chairman Gary Gensler and pledging to establish a strategic national Bitcoin stockpile. Democratic presidential candidate Kamala Harris is likely to continue the Biden administration's strong regulations if she is elected in November. Therefore, the outcome of the U.S. presidential election will significantly affect the cryptocurrency market.

Reconsidering Crypto Sanctions

China has been strictly regulating activities related to virtual currency in stages since 2017. Specifically, in September 2021, the People's Bank of China declared a ban on all cryptocurrency transactions and mining altogether to prevent cryptocurrencies from being used for money laundering, fraud, and other illicit financial activities. However, China is believed to be likely to change these policies and will open to cryptocurrencies by the fourth quarter of 2024, according to a South China Morning Post released on June 2.

The People's Court of China ruled in favor of Chinese crypto mogul Justin Sun, founder of TRON DAO, in his defamation lawsuit against the Chongqing Business Media Group. Operating under a set of different financial regulations from the mainland, Hong Kong's Bitcoin and Ethereum spot exchange was approved in April, igniting speculation that Mainland China may follow steps, according to Caixin Media on July 18. The value of cryptocurrencies received in China from July 2022 to June 2023 reached $86.4 million, according to a Chainalysis report. The report also showed that trading volumes on both centralized and decentralized exchanges in China represent 73.5 percent and 20.5 percent of the global average, respectively. The lifting of China's crypto ban could have a huge impact on the world market.

Adopting Crypto Payments

Russia has enacted a law allowing the use of cryptocurrency for international payments in response to the economic pressure from Western sanctions according to CNBC on July 30. The State Duma passed this legislation, enabling businesses to conduct cross-border trade using digital currencies. The Russian Central Bank is also set to allow crypto-based overseas transactions, with the first payments expected by the end of 2024. This move represents a major shift in Russia's stance on cryptocurrency.,.

Russia’s leading news agency TASS reported on Aug. 28 that Russian President Vladimir Putin will furthermore endeavor to form law enforcement practices which permit comprehensive regulation of digital currency-related issues. Consequently, a law that legalizes the use of cryptocurrency for cross-border payments in Russia, came in to force on Sept. 1. According to a TASS report on Sept. 5, a Russian official told reporters on the sidelines of the Eastern Economic Forum held in Vladivostok on Sept. 3-6 that cryptocurrency creates new opportunities for cross-border payments and offering more space for financial innovation.

Toward a Stable Future with Cryptocurrencies

The South Korean government considers blockchain technology as a future growth engine and is actively promoting policies to support it. While strengthening regulations on virtual currency, South Korea is fostering the development of its digital economy through innovations in blockchain technology, known for its crucial role in cryptocurrency systems.

Cryptocurrency has advantages ranging from security and global accessibility to transparency and low transaction costs. It also presents risks such as significant price volatility, a lack of regulation, technical barriers, and potential misuse. Therefore, comprehensive policies and regulations across the world are necessary to address the risks of crypto-related assets. In the future, cryptocurrency policies around the world must build a solid social foundation of trust with new laws and regulatory systems.

By Jeong In-hu, Reporter