Glossary

Crypto Regulation:

As cryptocurrencies have grown from speculative investment to a new asset class, countries have adopted different approaches to regulate the crypto industry. In the U.S., recognizing recognized the need for regulation to address digital assets, the Biden–Harris administration is in the process of developing a central bank digital currency called the digital dollar.

Cryptocurrency is subject to different classifications and tax treatment in different countries.

Crypto regulations in the United States:

In 2022, the U.S. declared a new framework that paved the way for further regulation. The new directive has given the power to prevailing market regulators like the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

The SEC has already made a move to regulate the sector with its hugely publicized 2020 lawsuit against Ripple. It is alleged that Ripple raised over $1.3 billion by selling XRP – its native token, in unregistered securities transactions. Meanwhile, recently crypto exchanges such as Coinbase and Binance have been under the SEC’s scanner over their crypto products. SEC Chair Gary Gensler is known to have referred to cryptocurrency as “a Wild West.”

It is believed that U.S. regulators will likely take a tough stand on cryptocurrency in the upcoming years to slow down the continuous arrival of new coins. The result of the SEC’s lawsuit against Ripple Labs is also expected to impact whether cryptocurrencies can be classified as securities.

One of the important issues that the Biden administration is willing to tackle is unlawful cryptocurrency activity. As per a fact sheet published by the Biden administration, the U.S.Treasury will conclude an illicit finance risk assessment on decentralized finance by the end of February 2023 and an evaluation on NFTs by July 2023.

Crypto regulations in China:

China has classified cryptocurrencies as property for determining inheritances. The People’s Bank of China (PBOC) prohibited crypto exchanges from operating in the country in 2013, claiming they encouraged public financing sans approval. Furthermore, in May 2021, China also banned Bitcoin mining. A few months later, in September of 2021, the country banned cryptocurrencies outright.

Nevertheless, China has been working on creating the digital yuan (e-CNY). In August 2022, the country officially started rolling out another round of its central bank digital currency (CBDC) pilot test program.

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