Crypto regulation in the world: weekly digest #85

Argentina

Argentina is preparing a new crypto regulation framework that will be soon overseen by the National Securities Commission (CNV), which will establish and regulate requirements for crypto companies in the country. The CNV's jurisdiction over virtual asset service providers is part of a reform of the money laundering prevention law being discussed in the Argentine Congress. The new regulations aim to ensure the protection of users, security, efficiency in operations, safeguarding public savings, and preventing money laundering among other provisions. These requirements are being put in place to comply with international standards set by the Financial Action Task Force, which will evaluate Argentina in 2024.

Experts suggest that Argentina is likely to progress on cryptocurrency regulation in 2023, focusing on creating a regulatory framework for Virtual Asset Service Providers like crypto exchanges. The country has been one of the region's significant adopters of cryptocurrencies, with a high level of adoption driven by factors such as high inflation and technical literacy. While Argentina does not accept Bitcoin as legal tender, it has not banned cryptocurrencies and has shown a relatively relaxed approach towards crypto policies compared to some other countries in the region.

The government's efforts to regulate cryptocurrencies are also aimed at combating fraud and Ponzi schemes prevalent in Latin America while promoting a more secure environment for users and investors. These regulations are part of the country's efforts to create a healthy regulatory framework for the cryptocurrency industry while fostering innovation and safeguarding investors.

South Africa

South Africa is taking steps to categorize stablecoins within its regulatory framework. The country's Intergovernmental Fintech Working Group is examining the use cases of stablecoins and their regulatory implications. They are also exploring the impact of tokenization on markets and plan to publish a discussion paper on tokenization policy by December.

Last year, South Africa's Financial Sector Conduct Authority (FSCA) and Financial Intelligence Centre (FIC) classified crypto as a financial product and began registering crypto asset service providers. This year, stablecoins will be included as a specific type of crypto asset according to the Treasury department's budget paper. The lack of a clear regulatory framework for stablecoins in South Africa poses challenges in monitoring these instruments effectively.

Hong Kong

This week Hong Kong's Monetary Authority (HKMA) has announced that it will allow institutions to test the issuance of stablecoins within a regulatory sandbox. This move aims to facilitate the development and innovation of stablecoin technology while ensuring a secure and compliant environment for the digital asset industry.

Hong Kong is in the process of establishing a regulatory framework for stablecoins, particularly focusing on stablecoins referencing fiat currencies. The proposed legislation aims to regulate stablecoins that serve as a digital representation of value used for various purposes like payments, debt discharge, and investments. The government has initiated consultations and discussions to introduce bills for stablecoin issuers and virtual asset over-the-counter services.

Hong Kong defines stablecoins as digital representations of value used as a medium of exchange, store of economic value, and more. These stablecoins are intended to maintain a stable value with reference to specific assets or a pool of assets. The proposed regime outlines stringent licensing requirements for stablecoin issuers, including management of reserves, investment limitations, risk management, disclosure, anti-money laundering measures, and more. The Hong Kong Monetary Authority (HKMA) will have the authority to impose and amend licensing conditions as needed.

The government plans to submit bills related to stablecoin regulation and virtual asset over-the-counter services to the Legislative Council once consultations are completed and preparatory work progresses.

News from other countries:

• BlackRock has introduced a spot Bitcoin exchange-traded fund (ETF) in Brazil, known as the iShares Bitcoin Trust BDR ETF. This fund allows investors to access Bitcoin through a security that mirrors the performance of the U.S. BTC ETF launched by BlackRock.

• As a result of accessing Russia’s progress in strengthening measures to tackle money laundering and terrorist financing, the country has been re-rated on Recommendation 15 (new technologies and crypto) from compliant to partially compliant.

• El Salvador, at last, has seen profits from its Bitcoin investments. The country's Bitcoin portfolio briefly swung into profitability for the first time in two years, making a profit of $4.16 million, which was up 3.54%. As of January 2024, El Salvador was sitting on $12.6 million in unrealized profits on its Bitcoin investment after being in the red for two years. President Nayib Bukele stated that if El Salvador sold all its Bitcoin holdings, it could bank roughly $41.6 million in profit, representing a 40% increase. These profits have been attributed to the surge in Bitcoin prices and the country's strategic investment decisions.