With the Australian government announcing a new cryptocurrency regulatory regime on Monday, and news in April that the U.K. government will introduce new regulations for stablecoins, steps are being taken around the globe to monitor and control the fast-moving digital asset industry, under the guise of consumer protection.
Australian Treasurer Jim Chalmers said in a statement that the “Treasury will prioritize ‘token mapping’ work in 2022, which will help identify how crypto assets and related services should be regulated.” (Mapping is a strategy that would account for a cryptocurrency’s underlying code and actual use when classifying an asset – theoretically allowing Australia to take a more flexible approach to digital asset oversight.)
Back in April, The U.K. Chancellor of the Exchequer, Rishi Sunak, stated, “We want to see the businesses of tomorrow – and the jobs they create – here in the U.K., and by regulating effectively we can give them the confidence they need to think and invest long-term.”
Worldwide, regulators are in the tough position of writing rules that can account for all the varied ways open source cryptocurrencies can be used without stifling innovation.
The U.K. Treasury, for instance, plans to pass legislation to clarify stablecoin regulation for payments, giving the government increased power to oversee authorities such as the Financial Conduct Authority (FCA), in bringing stablecoins under a regulatory framework that will allow the U.K. to become a “crypto hub.”
And in June of this year, the European Union introduced its much awaited Markets in Crypto Assets (MiCA) bill. This new legislation is geared towards regulating both digital assets and stablecoins, and would require digital asset firms to disclose all crypto transactions that take place on their platforms.
This came hot on the heels of U.S. news in April about the Securities and Exchange Commission (SEC) stating that the top crypto asset exchanges should be made to register with the SEC and comply with all relevant financial trading laws.
Officials across the globe insist these steps are aimed at protecting consumers and keeping the various governmental bodies at the forefront of the ever-changing digital asset terrain. However, blockchain enthusiasts and professionals alike feel new rules such as these could undermine the innovation that’s made blockchain technology so successful, and in fact threaten the very safety of the consumers they claim to protect.
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The EU’s MiCA bill in particular drew criticism from 46 leading crypto firms that stated some elements of the legislation actually put digital asset owners at risk, specifically their privacy and the security of their personal data. In addition, the 46 signatories of the letter penned to the EU finance ministers, argued that the laws would place the European Union at odds with other countries, making it a far less competitive location for crypto startups and therefore dissuading top tech talent from operating in EU countries.
Ironically, it was distrust of governments’ traditional role as issuers of fiat money that inspired the creation of Bitcoin and fueled the recent meteoric growth of digital asset markets worldwide. And this incredible increase in adopters of cryptocurrency, non-fungible tokens (NFT) and other digital assets, would signify that users appear comfortable with the risk involved in the volatile market.
Unfortunately, it still feels much more a case of “when” rather than “if” these restrictive rules and legislations will come into place.