Crypto regulation in the world: weekly digest #108

Turkey

Turkey's recent regulatory changes have led to a significant influx of cryptocurrency companies applying for operating licenses. The Turkish Capital Markets Board (CMB) announced that 47 crypto firms have submitted applications under the new regulations, which were implemented on July 2, 2024. Among the prominent exchanges that have applied for licenses are most popular global crypto firms such as Bitfinex, OKX, Gate.io and Binance.

The applications are part of Turkey's efforts to create a robust regulatory framework for cryptocurrency operations, following a period of less stringent regulations. The CMB has clarified that being listed as an applicant does not equate to receiving official approval; firms must still undergo a thorough review process.

Turkey's crypto market has seen significant growth, with the country ranking fourth globally in raw crypto transaction volume in 2022, with $170 billion in transactions. The surge in applications indicates a strong interest from both local and international firms in Turkey's cryptocurrency market, driven by recent regulatory developments.

The ongoing assessment process by the CMB will determine which firms ultimately receive the necessary licenses to operate legally in Turkey.

Thailand

Thailand's financial regulators, led by the Securities and Exchange Commission (SEC), have launched a new «Digital Asset Regulatory Sandbox» to promote innovation in the country's crypto and digital asset industry.

The sandbox aims to provide a controlled environment for companies to test and refine new cryptocurrency services under a flexible regulatory framework. It will allow participants to experiment with crypto-related business ideas without the immediate pressure of full regulatory compliance. The special regime covers six types of digital asset services that are eligible for testing:

• Crypto exchanges

• Brokers

• Dealers

• Fund managers

• Advisors

• Custodial wallet providers

Companies participating in the sandbox must demonstrate strong qualifications, such as adequate capital, robust management systems, and secure operational integrity.

The Thailand SEC is overseeing and supervising the regulatory sandbox. The initiative comes after the SEC Board approved the sandbox in principle in March 2024, followed by a public hearing in May where stakeholders supported the proposed regulations. The sandbox is open for applications starting August 9, 2024, and the testing period is limited to one year, with the possibility of extension if necessary.

The Thai government generally supports cryptocurrency as a means to diversify investment opportunities and foster national development. However, it remains cautious about the potential impacts of cryptocurrencies on financial stability and the economy. The SEC prohibits the use of cryptocurrencies as a means of payment for goods and services, emphasizing regulatory oversight to mitigate risks.

USA

The landscape for options trading on Bitcoin and Ethereum exchange-traded funds in the USA is evolving, particularly following recent approvals from the U.S. Securities and Exchange Commission. This week several prominent financial institutions have filed applications to list options on BTC and ETH ETFs, such as BlackRock, CBOE Global Markets and NASDAQ.

However, options trading, particularly in the context of cryptocurrencies, carries several inherent risks. Cryptocurrencies, including Bitcoin and Ethereum, are known for their extreme price volatility. This can lead to rapid and significant losses for options traders. Also, the liquidity of options on crypto ETFs may vary, potentially leading to difficulties in executing trades at desired prices.

Anyway, options trading requires a solid understanding of various strategies and market conditions, which can be challenging for inexperienced investors. In options trading, there is always a risk that the counterparty may default on the contract, leading to potential losses.

The SEC’s ETH and BTC-ETFs approval marked a significant milestone for cryptocurrency investments in the U.S. This approval came after a long period of regulatory hesitation. However, the timeline for the approval of options on these ETFs is less certain. The SEC's decisions are likely to be influenced by ongoing market conditions, investor interest, and regulatory developments.

News from other countries:

• Peru has recently implemented new regulations for Virtual Asset Service Providers aimed at enhancing anti-money laundering and countering the financing of terrorism measures. This regulatory update focuses on enforcing Know Your Customer (KYC) protocols and other compliance requirements for VASPs operating within the country.

• Tether has recently blocked accounts totaling approximately $16.5 million USDT. This action is part of Tether's ongoing efforts to comply with regulatory standards and enhance the security of its stablecoin, USDT. Earlier, the company has adopted a policy to voluntarily block addresses associated with individuals on the OFAC SDN List, enhancing its compliance measures. We continue to highlight the news of the world of crypto regulation worldwide. Please stay with us!