The big regulatory changes transforming crypto in 2023

The conversation around crypto regulation is louder than ever in 2023, but the global picture is still evolving. Important steps forward have been made, including Europe’s Markets in Cryptoassets (MiCA) Regulation, which should come into force between mid-2024 and early 2025.

MiCA sets out a clear and enforceable regulatory framework for crypto across the European Union (EU), providing crypto firms with welcome guidelines to expand and innovate within. But MiCA isn’t alone in bringing regulatory clarity to the industry. Other nations are pushing forward with crypto regulation of their own, fueling optimism and confidence in the space.

What are the big global regulatory moves happening in 2023?

Britain bounds ahead

The British government has made clear its ambitions to become a global hub for crypto and digital assets. Already, the nation has moved to regulate stablecoins with a view to introducing them as a recognized form of payment. And in February 2023, the government set out wider plans to regulate the industry which could be introduced within the next 12 months, claimed one minster in April 2023.

Tighter controls around crypto lending are of particular interest to encourage stricter due diligence among intermediaries involved in providing and distributing loans. The government sees cryptoasset technology as a catalyst for economic growth, and with a general election due in the UK by January 2025, the current government could see the realization of its crypto agenda as a major win in the run up to election season.

Dubai’s own ambitions

Further east, the United Arab Emirates is rivaling Britain with its own vision to become a hub for the virtual economy. Among the nation’s seven emirates, Dubai is leading the charge. In February 2023, Dubai’s Virtual Asset Regulation authority (VARA) announced new guidelines regulating the trading of virtual assets in the city. The new rules require any company looking to offer one or more crypto-related services to first secure mandatory licenses. The regulation is comprised of four rulebooks for service providers to follow and seven activity-based rulebooks governing the type of services offered.

With various crypto players already active in Dubai, the rest of 2023 could see VARA refine its guidelines and strengthen the local market, making an even more compelling case for the emirate as a global and regional hub.

Hong Kong makes its move

2023 is a big year for crypto regulation in Hong Kong. New licensing rules come into effect in the city on June 1 and require all virtual asset service providers to secure a license from the Securities and Futures Commission to operate. Authorities have stated the regulations will be robust and require exchanges to outline their plans to combat money laundering and protect users.

Outside of Hong Kong, Chinese law prohibits financial institutions and payment companies from offering services related to cryptocurrencies. Those laws won’t be affected by Hong Kong’s incoming regulation, but the city’s move to introduce legislation could start conversations around future plans for crypto in the region.

U.S. in the spotlight

All eyes are on the U.S. as major markets worldwide take decisive steps to regulate the crypto space. A report published in early 2022 by the Biden administration demonstrated support for stablecoin regulation, and acknowledged that safeguards are needed to “promote the responsible development of digital assets to protect consumers…” Towards these goals, state and federal-level regulation agencies have moved to govern digital asset activity using existing legal frameworks.

However, there’s currently no comprehensive regulatory structure for digital assets in the U.S. One key clarification that could arrive in 2023 is on which authority should be responsible for enforcing regulation across the domestic crypto space. With this responsibility defined, progress towards consistent and enforceable nationwide regulation could follow as the U.S. moves to remain competitive in a rapidly emerging industry.

A cause for optimism

The macro view on global crypto regulation should be cause for optimism. 2023 saw the EU set a countdown to the arrival of region-wide crypto regulation and other countries are close behind with regulatory plans of their own. National adoption should continue as the advantages of a closely governed crypto industry become clear. That’s good news for everyone involved.

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