Crypto regulation in the world: weekly digest #107

USA

A U.S. Senator Cynthia Lummis, recently introduced a significant legislative proposal known as the «Bitcoin Act 2024» (Boosting Innovation, Technology and Competitiveness through Optimized Investment Nationwide Act). This bill proposal aims to establish a strategic Bitcoin reserve to strengthen the U.S. dollar and enhance the country’s position in the global financial landscape.

The proposal seeks to create a reserve of Bitcoin, similar to existing reserves of gold and petroleum, to protect the dollar against inflation and support U.S. economic stability. The legislation includes a plan for the U.S. government to purchase 1 million units of Bitcoin, which would represent approximately 5% of the total Bitcoin supply. This acquisition would be funded by reallocating existing resources within the Federal Reserve and the Treasury Department.

The act stipulates that the Bitcoin acquired must be held for 20 years, during which it can only be used to pay down the national debt. For that purpose the Fed should establish a network of secure Bitcoin vaults managed by the U.S. Department of Treasury, ensuring high standards of cybersecurity and physical security for the assets. Lummis articulated that this initiative is crucial for maintaining the U.S. dollar's status as the world's reserve currency and fostering financial innovation in the face of rising inflation and national debt challenges.

While the «Bitcoin Act 2024» is the most recent and comprehensive proposal, Lummis has consistently advocated for policies that foster innovation in the cryptocurrency space, including calls for clearer regulatory frameworks and support for blockchain technology.

Russia

On July 30, 2024, Russia's State Duma approved significant legislation allowing the use of cryptocurrencies for international trade. This legislation is set to take effect in September 2024 and marks a notable shift in Russia's stance on cryptocurrencies, which had previously been largely restrictive.

The new law permits businesses to utilize cryptocurrencies for cross-border transactions, addressing the challenges faced by Russian companies in making payments to major trading partners like China, India, and the UAE. The Central Bank of Russia will establish an «experimental» infrastructure for cryptocurrency transactions, although specific details about this system have yet to be disclosed.

Despite this new law, the existing ban on cryptocurrency payments within Russia remains in effect. The legislation is part of a broader strategy that also includes regulations on cryptocurrency mining and the potential introduction of a digital ruble, which is projected for mass implementation by July 2025.

This legislative shift is a direct response to the extensive sanctions imposed on Russia, which have impacted Russia's trade capabilities. The Russian government aims to stabilize its economy and maintain trade relations through alternative payment methods, including cryptocurrencies.

It is notable, that Russia’s moves to make a legal regime for foreign trade in crypto are quite similar to Iran’s efforts in regulating crypto. In 2022 Iran has also legalized the use of cryptocurrencies for foreign trade transactions. Both countries are motivated by the need to bypass extensive Western sanctions. Russia's recent legislation allows the use of cryptocurrencies for international trade, while Iran has utilized Bitcoin for imports and mining to generate revenue since 2018. This shared goal of evading sanctions has driven both nations to explore cryptocurrency as a viable alternative for cross-border transactions.

Qatar

Qatar is preparing to lift its ban on cryptocurrencies as part of a broader initiative to establish a regulatory framework for digital assets. The country's financial regulators are in the process of developing this framework, which is expected to be unveiled early next year, potentially allowing for the trading of cryptocurrencies and investment tokens that represent underlying assets.

Qatar's new digital assets framework aims to regulate investment tokens and will likely include strict compliance measures such as «know your customer» and anti-money laundering obligations for licensed token service providers.

Unlike its Gulf neighbors, which have embraced cryptocurrencies, Qatar's cautious approach may allow it to create a more comprehensive regulatory environment that mitigates risks associated with digital assets. The Qatar Financial Centre is seeking feedback on the proposed legislation, with the final regulations expected to be rolled out in the first or second quarter of 2024.

This move is seen as a significant step for Qatar, which has previously maintained a strict ban on cryptocurrencies since 2019, partly due to concerns over financial crime and terrorist financing. The anticipated changes reflect a shift in the country's strategy towards embracing digital finance while ensuring regulatory oversight.

News from other countries:

• Do Kwon, the co-founder of Terraform Labs, is set to be extradited to South Korea after the Montenegro Appellate Court ruled in favor of South Korea's extradition request over that of the United States. This decision, made on August 1, 2024, confirms a previous ruling and concludes a lengthy legal battle regarding where Kwon would face charges related to the collapse of his cryptocurrency projects, which resulted in significant investor losses.

• Bybit has announced that it will cease all services and products in France. This decision is a direct response to recent regulatory changes in France, which have made it increasingly difficult for cryptocurrency firms to obtain necessary licenses.

• The U.S. Securities and Exchange Commission (SEC) has recently revised its stance regarding several cryptocurrencies, including Solana (SOL), in its ongoing case against Binance. The SEC's updated complaint now excludes SOL, along with Cardano (ADA) and Polygon (MATIC), from being classified as unregistered securities in this specific litigation. We continue to highlight the news of the world of crypto regulation worldwide. Please stay with us!