The advance of cryptocurrencies in the world is undeniable and seems irreversible. The asset reached US$ 3 trillion (around R$ 15.3 trillion) in November last year, according to the CoinGecko platform, a value that has declined in recent weeks. The flow provokes a great discussion in all countries: how to regulate this market, preventing risks that digital currencies bring – such as the greater ease for money laundering -, but without losing the opportunities they offer?
Currently, few nations have comprehensive legislation on the subject, but the debate is intense both among national authorities and in international organizations. Each country adopts a strategy to keep this market under control and the rules vary widely, despite calls from the International Monetary Fund (IMF) for coordinated action.
In most cases, the national financial authorities are at the forefront of the process, but, as the universe of cryptoassets is comprehensive – it can function as an investment, means of payment or even to access some specific benefit (utility tokens) -, it is common for some activities are regulated and others are not, within the same country.
Among the places with more advanced legislation, Japan, Singapore and other smaller countries stand out, trying to establish themselves as pioneers in digital currencies. El Salvador, for example, is the only nation that recognizes a cryptocurrency, bitcoin, as a national currency since last year. At the other end, China also banned activities related to the asset last year, a path that the Central Bank of Russia would like to follow, but does not seem to have the approval of the country’s president, Vladimir Putin.
VOLATILITY
Known for its high volatility, the cryptocurrency market has entered a sharp bearish trajectory since its peak reached in November, especially given the prospect of rising interest rates in the United States, according to cryptocurrency manager Hashdex. Still, the NCI (Nasdaq Crypto Assets Index), the American technology exchange, ended 2021 up 102%.
The IMF attests to the strong growth in recent years and also the expansion of connections with the regulated financial system, which poses challenges to financial stability. There are also concerns about the impact of adopting the assets as an official currency, especially in emerging and developing markets.
As a global asset, the IMF argues that national rules are limited and that uncoordinated regulatory measures can facilitate “potentially destabilizing” capital flows. Therefore, it advocates that the Financial Stability Committee (FSB) develop a global framework with standards for regulation.
For the fund, it would be appropriate to require authorization to provide services with digital assets and compliance with rules between crypto assets and related products already regulated. For example, if used for payments, they should be regulated by central banks.
“Countries are adopting very different strategies, and existing laws and regulations may not allow for national approaches that comprehensively include all elements of these assets,” says the IMF, in a December 2021 report.
The 2022 Nasdaq Cryptocurrency Regulation Summary points to recent advances in 28 key economies. According to the document, Japan was the first country to have a legal system to regulate cryptocurrency trading, in 2016. Singapore, Abu Dhabi and Bermuda also have extensive legislation on the subject.
REGULATION
Among the most recent proposals, the United States and India stand out. In the world’s largest economy, the SEC, capital market sheriff, released, in January, a proposal that could place trading platforms under its regulation, in the case of the purchase and sale of virtual assets considered securities.
The proposal is that these platforms be characterized as a brokerage or alternative trading system, according to the head of regulation and product design of the Mercado Bitcoin platform, Juliana Facklmann. by a self-regulator, authorization would be decentralized and simpler, providing security to the market without impeding competition.” The cryptocurrency futures market in the US is already regulated by the Commodity Futures Trading Commission.
In India, the government said earlier this month that it would tax profits from virtual currencies by 30% and that it should launch its CBDC, the digital rupee, by next year, a move that was seen in the sector as a step towards regulation. CBDCs are an effort by world monetary authorities to maintain currency sovereignty in an environment of growth of cryptocurrencies in general, but, in particular, of stablecoins, a privately issued crypto asset backed by a real asset, therefore more stable. “Today, the regulator has already understood that it is a path of no return. Making a CBDC is a way of being within the competition”, says Rudá Pellini, president of Arthur Mining, a digital asset mining company that operates in the United States and author of the book The Future of Money.
Among the proposals under study, Facklmann, from Mercado Bitcoin, highlights the European Union, which has a very comprehensive project in progress in Parliament, but it is intended for “utility tokens” and means of payment, not including investments. Within the bloc, France wants to establish itself as a country open to the crypto world and the government is also working on specific legislation.
In Brazil, there are projects under discussion in Congress and the tendency is to create basic rules for the market, which should be more detailed in subsequent regulations, probably under the responsibility of the Central Bank. “Each country is living its experience, doing its best”, summarizes Facklmann, who, in spite of that, sees a “confluent spirit” because no country wants to be left behind and miss opportunities in this market.
The information is from the newspaper. The State of São Paulo.
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