Crypto regulation in the world: weekly digest #21

We wrote last week about the consequences of the FTX crash. Financial watchdogs in the USA and Europe have realized that economic impacts of the cryptocurrency exchanges’ bankruptcy are the same as those of traditional financial institutions.

For example, at the G20 summit in Indonesia, was supported the proposal of US President Joe Biden that crypto businesses should be regulated on the basis of the principle «same activity, same risk and same regulation». Other countries have already started passing laws to set the framework and requirements for cryptocurrency exchanges and other virtual asset service providers (VASPs).

El Salvador

The lawmakers of El Salvador, where Bitcoin is already equal to the national currency, began to consider a bill proposal aimed at regulating the activities of VASPs and cryptocurrency issuers in the country. The bill talks about the creation of a special commission that will register cryptocurrency businesses and oversee operations with crypto assets.

VASPs in the country will be required to complete the registration process and provide a list of the crypto assets they plan to work with, as well as the associated benefits and limitations. VASPs must carefully consider security measures when serving customers. In addition, cryptocurrency companies will have to disclose the names and positions of their top managers and indicate the jurisdictions in which they operate.

South Korea

In South Korea, amendments to the Digital Assets Law to tighten control over cryptocurrency exchanges in order to prevent situations that arose with FTX and Terra has been proposed. The bill sets a prohibition for VASPs to dispose freely their clients' funds, as FTX and Alameda Research have done.

Cryptocurrency exchanges will also be prohibited from taking any action in the event of market fluctuations or changes in trading volume. In addition, exchanges will be required to immediately report any fraudulent activity to the South Korean Financial Supervisory Service (FSS), which will be required to take action to prevent fraud, money laundering or other crimes related to cryptocurrencies.

Uzbekistan

We already mentioned that Uzbekistan legalized mining, exempted miners from paying most taxes and set key rules for carrying out crypto exchange businesses. The National Agency for Perspective Projects (NAPP), the country's cryptocurrency market watchdog, has issued first crypto licenses, that authorizes the offering of cryptocurrency-related services by two «cryptocurrency shops»: Crypto Trade NET and Crypto Market. By present time, we could not find the websites of these companies. Perhaps they still has not been launched. Both companies are based in Tashkent, the capital city of Uzbekistan.

Starting from Jan. 1, 2023, the government of Uzbekistan will allow the provision of crypto services to Uzbek citizens only by licensed cryptocurrency firms. Due to the regulation changes some unlicensed crypto exchanges that were carrying out businesses in the country has already ceased operations.

Russia

The Russian State Duma is discussing the creation of a state-owned crypto exchange. In Russia there is still no legal framework for crypto assets, and the discussion of the law on cryptocurrencies has been unsuccessfully lasting for more than two years. At the same time, last week, a draft law was proposed to the legislators for consideration, which proposes to introduce a complete ban on operations with cryptocurrency in the country, as well as a ban on advertising any services related to cryptocurrency. However, the law allows mining and requires the sale of mined coins either outside the country or through some organization operating under a special legal regime. Thus, the national crypto exchange highly likely may be this very organization.

News from other countries:

• US watchdogs launched investigation against Genesis Global Capital, which said it might start bankruptcy proceedings. The company is experiencing financial difficulties as it lost some of its liquidity due to the bankruptcy of the FTX crypto exchange.

• The European Union has voted for the European declaration on digital rights and principles for the digital decade. The declaration aims to promote European values within the digital transformation, putting people at the center, with digital technology benefiting all individuals, businesses, and society.

• In Brazil, legislators have begun to consider a bill that creates a legal framework for the cryptocurrencies in the country.

• The International Monetary Fund (IMF) proposes to strengthen the regulation of the African cryptocurrency market. This should protect users from fraudsters and stop money laundering schemes. The IMF believes that the risks associated with cryptocurrencies are increasing precisely in developing countries.

We continue to highlight the news of the world of crypto regulation worldwide. Stay tuned for the latest news!