As the technological essence of blockchain, crypto, and tokenization persistently advances, corresponding regulatory frameworks worldwide continue to take form. Some regions still wade through the vague waters of regulatory uncertainty, while others elucidate their regulatory standpoints more definitively. To bolster trust and provide a safe, functioning environment for the community to thrive long-term, the digital asset space necessitates regulatory clarity.
David Lawant and Purvi Maniar of FalconX give a straightforward breakdown of the global cryptocurrency regulation landscape. The duo illustrates how regulatory certainty influences the fluctuations in price, showcasing a new aspect of the blossoming regulatory frameworks in our industry.
Regulatory frameworks play a more crucial role in the crypto market than ever before. The recognition of crypto as an approved payment method in Japan in 2016 nudged the 2016-2017 crypto bull market. Likewise, the Office of the Comptroller of the Currency’s interpretative letters in 2020, providing financial institutions with the needed assurance to interact with crypto, catalysed the 2021 run. So much so that the lack of regulatory clarity could hamstring the next potential bull market, with the complexity level rising as the stakes soar.
Interestingly, regions worldwide are engaging in a tug-of-war to attract crypto businesses and innovators by putting in place clear and understandable regulations. The approval of the crypto and stablecoin regulation bill by the British upper house, or the giant crypto venture capital firm a16z choosing London for its first office due to its warm stance on crypto, suggest a progressive trend.
In stark contrast, the United States is seen as lagging in this regulatory scope. Earlier crypto operation hurdles, attributed to limited banking access for crypto firms, and the Securities and Exchange Commission’s (SEC) alleged excessive involvement, have shrouded the U.S crypto industry with uncertainty, compelling credible operators to seek solace offshore. Nonetheless, recent events suggest a potential shift in favor of crypto in the U.S. The Blackrock spot BTC ETF filing and the SEC showing interest in futures-based ETH ETFs suggest slight but noticeable progress.
However, even with these subtle regulatory advancements, we still have an uphill climb ahead. For instance, even if the market structure and stablecoins bills successfully pass through the House, a potential stand-off subsequently at the Senate and the White House could threaten their adoption. Despite these challenges, the majority of events in 2023 have portrayed a hopeful future for crypto regulation in significant jurisdictions worldwide.
The global need for crypto regulatory clarity has moved from being a wishful luxury to a critical necessity. Even though the developments are far from perfect, and despite the U.S being significantly behind, we are witnessing the shaping of the foundational groundwork necessary for adequate crypto regulation. Even as we anticipate ambitious regulatory prospects, we must not shy away from engaging in open conversations about the risks associated with investing in crypto.
Source: Coindesk
