8th March 2022 > > More regulation.

tl;dr

The US, EU and Japan are all beefing up their crypto regulations probably to the benefit of the crypto industry.

Market Snap (at time of writing)

Market Wrap

A little easing of the over leverage we saw yesterday in the perpetual futures market as the short trade loses some steam. Equities suffering from Ukraine related woes but there is an increasing prospect of a sudden positive breakthrough.

Curious Cryptos’ Commentary – Regulation in the US

Crypto regulation in the US is a smorgasbord of options with responsibility split across different national bodies like the Securities and Exchange Commission (SEC), the Commodities Futures Trading Commission (CFTC), the Internal Revenue Service (IRS), the Office of the Comptroller of the Currency (OCC) and the Financial Crimes Enforcement Network (FinCEN).

In addition, different states have taken wildly different stances on their attitude to cryptos, with the extreme one of banning crypto businesses entirely, which was the case for New York until common sense prevailed quite recently.

The CCC is all in favour of regulatory competition at the state level – missing out on crypto tax dollars tends to force politicians to reassess their own prejudices against cryptos. However at the federal level, confusion is currently being sown, and that is not helpful.

US President Joe Biden has heard that criticism and is now acting upon it.

This week he will sign an executive order:

"The order will direct federal agencies to examine potential regulatory changes, as well as the national security and economic impact of digital assets."

Whilst this order has long been mooted, the sudden emergence of this order may possibly be down to the lack of coherence between the legacy financial institutions and the centralised crypto world in their response to the war in Ukraine.

The sentiment is a positive one, but the outcome is uncertain at this stage.

Curious Cryptos’ Commentary – Regulation in the EU

The Markets in Crypto Assets (MiCA) will finally be put to a vote by the European Parliament on March 14th.

Supported by Convicted Criminal Christine Lagarde (head of the ECB) it has had the very positive effect of persuading Lagarde to support EU rules and regulations rather than pushing for pointless and damaging “global regulation”.

Stefan Berger, rapporteur for the bill, had this to say:

“… all those involved are now asked to support the submitted draft & to vote for MiCA. Strong support for MiCA is a strong signal from the EU Parliament for a technology-neutral and innovation-friendly financial sector.”

This is in line with one of the introductory sentences to the bill:

“… to create a regulatory framework for the crypto-assets market that supports innovation and draws on the potential of crypto-assets in a way that preserves financial stability and protects investors.”

The EU is clearly getting serious about attracting and retaining crypto tax dollars.

Curious Cryptos’ Commentary – Regulation in Japan

The Financial Services Agency (FSA) in Japan has proposed alterations to current rules “… to build a stable and efficient settlements system”. It seems the new rules are focussed on the monitoring of crypto transactions by banks and other financial institutions.

Specifically, there will be a formal registration process for intermediaries that provide buying, selling, and management services for cryptos. Moves like this provide a lot of benefit for the development of the crypto industry and puts positive pressure on companies like Binance and its childish CEO Changpeng Zhao to grow up and organise the business like an adult (see CCC 11th February 2022 amongst others).

In addition, the FSA talked about fostering the national blockchain and crypto sector, indicating that the mind-set of the regulators is a positive one.