Blockchain Strategy Shaping Europes digital future

When Celsius ultimately froze customer withdrawals and filed for bankruptcy, many investors were caught by surprise, especially in light of repeated statements by the company and its CEO Alex Mashinsky that Celsius had billions of dollars of liquidity. Crypto assets may increase the competition and choice in the financial market, by challenging the dominance of incumbent players and offering alternative or complementary solutions to the existing ones. Crypto assets may also provide consumers and investors with more options and flexibility to AML Risk Assessments diversify their portfolios and manage their risks. Cryptocurrency exchange regulations in South Korea are strict and involve government registration and other measures overseen by the South Korean Financial Supervisory Service (FSS).

The intersection of public and private law in blockchain regulation

• Many jurisdictions in the world are in the process of rolling out regulations for stablecoins, which are fiat-backed tokens.
• To ensure compliance, businesses should conduct detailed internal assessments of their operational functions, security frameworks, and transparency practices well in advance of this final 2026 deadline.
• On 3 July 2024, it was reported that 14 overseas payment service providers and card organisations, including Ant Group and Mastercard, have extended the International Consumer Friendly Zones programme to the major Chinese cities of Chengdu and Chongqing.
• However, the Division advises that “an entity engaged in the business of selling or issuing checks or of receiving for transmission or transmitting money or credits is required to have a license under [NV Rev Stat § 671].
• A not-for-profit organization, IEEE is the world’s largest technical professional organization dedicated to advancing technology for the benefit of humanity.© Copyright 2024 IEEE – All rights reserved.

SB 1383 (sent to the governor on June 8, 2022) includes cryptocurrency in the definition of liquid assets for divorce matters. SB 1493 would https://www.xcritical.com/ allow state agencies to pay their employees in virtual currency if requested by the employees. SCR 1013 defines digital currency as a medium exchange and asserts the right to own digital currency. The overall purpose of this paper is to demonstrate that securities law frameworks alone are unfit for the comprehensive regulation of blockchain technology. This is not to say that they are not needed at all, but they should not be the primary approach of regulators for all embodiments of blockchain technology.

Cryptocurrency regulations around the world: The EU

The FSB has been working closely with the sectoral standard-setting bodies (SSBs) and international organisations to ensure that the work underway regarding the monitoring and regulation of crypto-asset activities and markets is coordinated, mutually supportive, and complementary. The global framework includes a shared workplan that the FSB and SSBs have blockchain payments developed for 2023 and beyond. Through this, they will continue to coordinate work under their respective mandates to promote the development of a comprehensive and coherent global regulatory framework, including through the provision of more granular guidance by SSBs, monitoring and public reporting. In South Korea, cryptocurrency exchanges and other virtual asset service providers must register with the Korea Financial Intelligence Unit (KFIU), a division of the Financial Services Commission (FSC).

Sale or exchange of cryptocurrency in the ordinary course of business

ASIC engages with regulators overseas to deepen its understanding of innovation in financial services, including in relation to cryptocurrencies. In particular, ASIC’s enhanced cooperation agreement with the United Kingdom’s Financial Conduct Authority remains on foot, which allows the two regulators to, among other things, information-share, refer innovative businesses to each regulator’s respective regulatory sandbox, and conduct joint policy work. ASIC also currently has either information-sharing or cooperation agreements with regulators in jurisdictions such as Austria, Brazil, Canada, China, Germany, Hong Kong, Indonesia, Israel, Italy, Japan, Kenya, Luxembourg, New Zealand, Singapore, Switzerland and the United States of America.

On 13 June 2024, the EBA published a package of technical standards and guidelines on prudential matters under the Regulation on markets in cryptoassets (MiCA). On 18 June 2024, the Head of Payments Policy  at the Reserve Bank of Australia gave a speech to announce an upcoming holistic review of retail payments regulation. The review will form part of the government’s plans to update the definition of ‘payment system’ and ‘participant’, and consider regulation of buy-now pay-later (BNPL) services. While national initiatives in this field are welcome, the issuance of and provision of services related to crypto-assets is now regulated on an EU-wide level under the Regulation on Markets in Crypto-assets (“MiCA”), which was finally adopted in April 2023. 7.- Regulation on the use of blockchains as a valid regulatory registry for the Internet of Things. It would therefore be truly useful to establish a shared registry storing the “identity” and details of each connected thing, while allowing them to conduct transactions between each other, including M2M (machine-to-machine) payments.

Unfortunately, despite giving Diem positive substantive feedback on the design of the network, it nevertheless became clear from Diem’s dialogue with federal regulators that the project could not move ahead. On January 31, 2022, the Diem Association announced the sale of its intellectual property and other assets related to the running of the Diem Payment Network to Silvergate Capital Corporation (Diem 2022). Diem’s announcement means that cryptocurrency has a long way to go to get approval from the regulatory authority. In addition to its dedicated fintech contact point, the Austrian Financial Market Authority (Finanzmarktaufsicht; “FMA”) established a regulatory sandbox in fall 2020 to assist with new business models requiring authorisation under Austrian financial services regulation (see further below). At the same time, regulators and the government stress that integrity, security and investor protection must not be compromised. For instance, the FMA regularly warns investors of the risks of cryptocurrencies and certain business models involving cryptocurrencies (in particular, where relevant service providers are neither regulated nor supervised by the FMA).

Today’s announcement is the latest effort by Attorney General James to rein in the cryptocurrency industry. In March, Attorney General James continued her efforts to crack down on unregistered cryptocurrency platforms by filing a lawsuit against KuCoin for failing to register as a securities and commodities broker and falsely representing itself as a marketplace. In February, Attorney General James brought action against CoinEx for similarly failing to register as a securities and commodities broker.

As smart contracts are automatically settled, they are likely to be litigated on only if a party disputes the automated outcome. The value of the deduction is based on that of the underlying goods purchased and services received with other scenarios in IRAS’ guide to income tax treatment of digital tokens. Conversely, businesses using payment tokens to pay for goods and services are allowed a deduction for the goods purchased or services received, subject to general deduction rules. Digital token is defined under the FSMA, which sets out a similar definition to “digital payment token” under the PSA. The FSMA targets companies with operations in Singapore that do not offer services to resident entities. It has adopted a four-pronged approach to building an ecosystem to explore the potential of distributed ledger technology and support the tokenisation of financial and real economy assets, enable connectivity and anchor those with strong value propositions and risk management.

This proposal was put to Australian parliament in early 2022; however, the proposed legislation lapsed with the change of Government. Subsequently, on 7 August 2023, Treasury released consultation and related exposure draft legislation on licensing exemptions for FFSPs. The licensing exemptions were broadly based on the 2022 legislation, including a professional investor exemption, a comparable regulator exemption, a market maker exemption and a fit and proper person test exemption. On 30 November 2023, the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023 was introduced to Parliament, which was an updated bill considering the feedback from the August 2023 consultation.

On 8 July 2024, the Boerse Stuttgart Group (BSG) announced that it will expand its market data offering by including ESG data for cryptocurrencies. This move follows the transparency requirements put in place for cryptoasset service providers under the EU Markets in Cryptoassets Regulation (MiCA), which includes sustainability figures for the cryptocurrencies on offer. That means developing financial services that are secure, reliable, affordable, and accessible to all. To make payments more efficient, the Federal Reserve has planned the 2023 launch of FedNow—an instantaneous, 24/7 interbank clearing system that will further advance nationwide infrastructure for instant payments alongside The Clearinghouse’s Real Time Payments system. Some digital assets could help facilitate faster payments and make financial services more accessible, but more work is needed to ensure they truly benefit underserved consumers and do not lead to predatory financial practices.

It is expected that such legal certainty will also bring more confidence in the sector and help the development of strategic crypto-related projects. Further, the introduction of a European passport for crypto-asset service providers, allowing them, once authorised, to provide crypto-asset services in all European jurisdictions, will enhance the possibility to scale-up crypto-projects at European level. This European passport will solve the current market fragmentation issue due to the lack of harmonisation at European level.

This group is committed to assisting clients in navigating the intricate landscape of technology and digitalisation. Thomas Kulnigg is a partner at Schoenherr, where he specialises in venture capital, technology transactions and other technology matters. He is member of the Steering Committee of Schoenherr and co-heads the firm’s intellectual property & technology practice.

Crypto assets may increase the financial inclusion and empowerment of individuals and businesses, by providing access to alternative sources of funding, payment and investment, especially for the unbanked or underbanked populations. Crypto assets may also foster the participation and collaboration of diverse and distributed stakeholders, by creating peer-to-peer networks and communities that are governed by consensus and incentives. They are broadly subject to capital gains tax across the region while transactions in Brazil, Argentina, and Chile are also subject to income tax in some contexts. The Maltese government has also indicated that it will turn its focus to the integration of AI with cryptocurrency regulation and may implement specific guidelines for security token offerings. In 2021, Switzerland introduced the Distributed Ledger Technology (DLT) Act with the goal of adjusting Swiss laws to take advantage of cryptocurrency innovation.

Gains on the sale of the cryptocurrency will be assessable and losses will be deductible (subject to integrity measures and “non-commercial loss” rules). The Reserve Bank of Australia (RBA), Australia’s central bank, indicates no immediate plans to issue a retail CBDC. However, it indicates a perceived use for wholesale CBDCs and is currently undertaking various industry research projects to explore use cases and economic benefits of a CBDC in Australia.

However, this grandfathering period is not mandatory for all jurisdictions, meaning some EU member states may offer a shorter period. A clear aim of MiCA is to protect monetary sovereignty and financial stability of the EU market. Consequently, the regulations on stablecoins, particularly on issuers of variants, are quite tight. Anyone planning to issue EMTs and ARTs will need to obtain authorization before listing or publicly offering their assets in the EU. This authorization must come from the issuer themselves, unless they explicitly grant written consent to another party to do so.