When it comes to cryptocurrency/blockchain regulation, considerable attention has been focused, this past year, on the United States’ action (or inaction). But the U.S. is not the world, just one important player, and crypto, from its beginnings, has been a global enterprise.
Perhaps, then, it makes sense to step back and ask: What is going on with crypto regulation when viewed through a global lens?
For instance, how do geographic regions such as Europe, Asia and North America compare in terms of crypto legislation, rules and enforcement? Is there any single country or jurisdiction that could serve as an exemplar for regulation? How is the developing world dealing with all this variation? And finally, are there reasons to be hopeful about the way regulatory trends are now unfolding?
If one focuses solely on the negative — the tide of crypto-related collapses, bankruptcies and enforcement actions in the United States this past year — a skewed picture can emerge. Progress in places like Europe might be overlooked, like the European Union’s recent adoption of its Markets in Crypto-Assets (MiCA) regulatory framework.
“Through MiCA, the European Union has been a global model by offering the much needed regulatory clarity that crypto businesses of varying sizes and business models would need,” Caroline Malcolm, vice president of global Policy at Chainalysis, told Cointelegraph, adding:
“Regulatory clarity and consistent implementation of rules will allow businesses to devise their operational program.”
Nor is Europe necessarily alone in pursuing a forward-looking path. “There is massive momentum on achieving regulatory clarity for digital assets across the world, whether that be in the U.S., Singapore, the UAE or others,” Malcolm said.
A fragmented world
Despite some promising trends, global crypto regulation — laws, rules, enforcement, taxation, etc. — remains a mixed bag.
“There’s a lot of fragmentation when it comes to regulation depending on the jurisdictions and geographical areas,” Bertrand Perez, CEO of the Web3 Foundation, told Cointelegraph in an interview earlier this week.
“In the U.S. we know, we know what’s happening or what is not happening over there,” continued Perez, who earlier served as chief operations officer at the Diem Association (formerly Libra, Facebook’s high-profile but ultimately failed stablecoin experiment).
Europe’s MiCA regulations, by comparison, focus on stablecoins. Indeed, MiCA is the EU’s “answer to the Libra project,” Perez said.
Significantly, the Europeans recognize that one can’t have a single regulatory framework for everything crypto, he added. MiCA is step one, “but then they’ve been slicing the use cases.” There will eventually be another regulatory framework for nonfungible tokens and another for metaverse-related use cases.
The EU doesn’t hold a monopoly on progressive thinking either. Switzerland, which is not an EU member, was the first country to develop a clear crypto framework back in 2018.
The Swiss regulatory scheme separates tokens into three categories: security (a.k.a. “asset”) tokens, utility tokens and payment tokens, and also provides a number of licensing schemes dependent on the project’s structure.
In the U.S., by comparison, the Securities and Exchange Commission appears to have categorized all digital tokens — with the possible exception of Bitcoin — as security tokens. But in Switzerland, according to Perez:
“If you are a utility token and or if you’re a security token, the rules of the road are completely different from the regulation perspective.”
The legal certainty that Switzerland has offered for several years now is the reason that so many crypto-related foundations and companies are based there and the reason so much Web3 innovation comes out of that country, he said. The Web3 Foundation, creator of the Polkadot protocol, is based in Zug, Switzerland.
Historically, Singapore followed Switzerland’s lead, and for a while, those two venues stood alone in terms of crypto rule-making clarity. “In 2019, when we announced Libra, there were those two choices, either Switzerland or Singapore, in terms of regulation,” Perez recalled. “The two countries were clearly leading the pack and having clear frameworks that were well defined.”
The evolving case of Japan
Today, there are more approaches. “In Asia as a geographical area, every country is having a different approach” to regulation, Perez continued.
However, Japan is one jurisdiction that is attracting more attention than the others. Japan was formerly the home of Mt. Gox, which was the subject of crypto’s first mega scandal. When that cryptocurrency exchange collapsed in 2014, it arguably made Japan crypto-wary. But if so, the island nation seems to be emerging from its isolation now — at least based on discussions Perez and others have held there recently.
“Japan is still a land of many innovations,” he reported. Indeed, at the WebX conference held in Tokyo in late July, Japanese Prime Minister Fumio Kishida announced, “Web3 is part of the new form of capitalism,” adding that it would be a vital element of Japan’s economic strategy, centered on growth, innovation, wealth distribution, digital transformation and the support of startups.
“The Prime Minister announced that basically he is welcoming Web3 to Japan, where a year ago or even a few months ago it wasn’t clear if they were supportive or not,” Perez told Cointelegraph. “Now it’s clear and the rules are going to be as business friendly as possible.”
Japan wanted to develop and implement clear and well-defined rules of the road for cryptocurrencies before it opened its gates again after Mt. Gox, Perez suggested, and they have those now. As he further noted:
“Japan’s crypto exchanges are the safest in the world now because the regulation is very strong. And now they are broadening their reach and welcoming broader [crypto] use cases.”
The most progressive G7 nation?
Elsewhere, China has been in the process of launching its digital yuan, becoming “the first country to have a central bank digital currency at scale,” according to Perez. Meanwhile, Dubai, the most populous city in the United Arab Emirates, is now “really pushing hard” in the crypto sphere “to attract not only capital but also skills from all around the world,” said Perez.
Asked to rank the largest Western countries in terms of regulatory crypto foresightedness, Perez put the European countries ahead of Japan, with the U.S. bringing up the rear. Within the EU, he would place his native France at the forefront, given that it is “the first European country to clearly implement the MiCA framework ahead of the law being enforced in the European Union.”
France has also done a good job at defining the rules of the road “in a way that is usable from a business perspective.” The U.K., no longer in the EU, is also “beginning to shift and see the value” in crypto and blockchain technology, he added.
Perez even detects “a different tone” among U.S. regulators and legislators; they now seem less likely to view the cryptoverse as a place inhabited chiefly by drug dealers and money launderers. He also observed that cryptocurrency reform is being spearheaded by legislators “on both sides of the aisles” within the most recent U.S. Congress.
What about low- and moderate-income countries — where do they stand with regard to crypto regulation?
“Most of those countries are basically waiting for the big players like the U.S., the European Union and Japan,” Perez said. They will watch to see which frameworks work best and can be adapted to their particular circumstances.
Which regulatory elements would he especially like to see duplicated globally? “If I had to recommend one framework, I would choose a combination of the Swiss token framework and parts of the EU’s stablecoin framework,” Perez answered.
These would offer some flexibility and encourage innovation. Within the EU framework, there is even room now for a token to be reclassified over time. A token might begin its “life” as a security token, but later evolve into a utility token. As the Web3 Foundation’s chief legal officer, Daniel Schoenberger, explained to Cointelegraph in May:
“A token can be used initially as a fundraising instrument. If a token is used for fundraising purposes, it should be subject to all applicable laws and regulations. However, over time that same token may serve a functional purpose devoid of speculative investment. This is part of the nature and innovation of blockchain technology.”
When asked whether he viewed the global regulatory glass as half empty or half full, Perez noted that this past year was generally a difficult one for the crypto sector amid scandals and bankruptcies like FTX and Celsius.
However, “I think we’ve passed through the worst,” Perez said. Some harsh criticism was heaped upon the industry, but that in turn may have led to “a bit more transparency” as well as reinforcing the need to build projects that last. Perez continued:
“So from that perspective, I’m very optimistic in terms of regulation. I’m also optimistic regarding U.S. policymakers. People are really starting to get it.”
Nigel Farage has confirmed he wants to deport women asylum seekers back to the Taliban in Afghanistan if he becomes prime minister.
The Reform UK leader’s position on the topic has not been clear, with him previously saying he would send women back to the fundamentalist regime that took over after western militaries withdrew, before now saying he would.
Mr Farage was speaking to Sky News’ political editor Beth Rigby at the Reform UK party conference in Birmingham.
When asked if he would “detain” women and children and “send them back”, the Clacton MP said “yes”.
Challenged on when he said in August that he was not “discussing” women and children, Mr Farage claimed this was a reference to his desire to seeing men detained on arrival in the UK.
At the time he said he was “very, very clear” on the “deportation of illegal immigrants”, adding: “We are not even discussing women and children at this stage – there are so many illegal males in Britain, and the news reports that said that after my conference yesterday were wrong”
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Speaking today, Mr Farage claimed that the UK has a “duty of care” if a four-year-old arrives in a dinghy, for example – but not so for women and men.
“For clarity, those that cross the English Channel will be detained and deported, men and women,” Mr Farage went on.
“Children, we’ll have to think about.”
The Reform leader also rowed back on his pledge to stop all boats within two weeks if he is elected prime minister.
Speaking to the conference yesterday, Mr Farage said: “You cannot come here illegally and stay – we will stop the boats within two weeks of winning government.”
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Watch Farage face questions on his tax affairs
But speaking to Beth Rigby today, he changed tack – saying “the passing of legislation” would be required.
He said the boats would then be stopped within two weeks, or sooner.
In the interview with Rigby, Mr Farage tried to claim he did not say he would end the boats within two weeks of “winning government”.
But the video of his speech, as well as the transcript released by Reform UK, clearly show him saying: “We will stop the boats within two weeks of winning government.”
When asked why he wouldn’t be able to stop the boats within two weeks of winning government, Mr Farage said it was impossible and “no one” can prevent them crossing the Channel.
The Reform UK leader said the law he wants to introduce will be called the Illegal Migration Act once it is passed by parliament.
He confirmed his agenda includes leaving the European Convention on Human Rights, shutting down asylum hotels and housing people at RAF bases instead, as well as deporting Channel migrants.
Mr Farage also claimed that deportation flights would also begin within two weeks of the law changing, and this combination of factors would stop people from wanting to travel from France.
This strategy all depends on Reform UK winning the next general election – which Labour does not have to call until 2029.
However, Mr Farage says he believes the government will collapse in 2027 due to economic pressure and other factors.
Reform are currently well clear of Labour and the Conservatives in the polling, and are targeting next year’s Welsh, Scottish and English local election to try and win more power in councils and national assemblies.