Crypto Regulatory Roundup: Turbulence and Transition in 2024
The global landscape of cryptocurrency regulations has undergone significant changes in 2024, following our last coverage on global regulations in 2023, governments and regulatory bodies worldwide strive to strike a balance between fostering innovation and mitigating risks in the rapidly evolving digital asset ecosystem.
Following this year’s high-profile events such as the sentencing of CZ, ongoing rise of crypto scams as well as former US President Donald Trump’s controversial views at the Bitcoin 2024, the digital asset landscape continues to face challenges in regulation. Let’s take a closer look at the key developments this year with a particular focus on Asia and Hong Kong, where the OAX Foundation is headquartered.
US and Europe are taking action
In the European Union, the comprehensive MiCA (Markets in Crypto-Assets) framework has been implemented, providing a harmonized set of rules for the crypto sector. There are plans to introduce new regulations for cryptocurrency, requiring companies to obtain licenses, service providers to identify senders and recipients for all transfers by January 2026, in an effort to better protect investors and prevent financial crimes following the collapse of FTX.
Meanwhile, the U.S. SEC has taken a more active role in regulating the crypto industry, leading to high-profile legal setbacks such as the jailing of former FTX executive Ryan Salame. However, the Biden administration has vetoed a bill aimed at limiting SEC oversight, underscoring the ongoing debates around the role of government in regulating the digital asset industry. Here are a couple of noteworthy developments in the US this month:
- Market is highly reactive to court ruling
XRP surged 17%, beating Bitcoin’s gains, after a U.S. judge ruled in the long-running case between Ripple Labs and the SEC, ordering Ripple to pay $125 million in civil penalties and imposing an injunction against future securities law violations, led to a jump in XRP’s price from, while other major cryptocurrencies like Bitcoin, Solana, and Ethereum saw significant movement.
- Beyond pure Spot Ethereum ETF
BlackRock and Nasdaq have submitted a proposal to the U.S. Securities and Exchange Commission (SEC) for an options-enabled spot Ethereum exchange-traded fund (ETF) that, if approved, would allow investors to gain exposure to Ethereum through the options market rather than directly holding the underlying cryptocurrency, in a strategic move to work within the SEC’s current regulatory framework and potentially pave the way for a pure spot Ethereum ETF in the future.
Broader Asia and emerging markets
Japan recognizes cryptocurrency as a form of money property, with crypto and fiat transactions regulated by the Financial Services Agency, though the country has recently tightened rules on customer information sharing between exchanges to combat money laundering. South Korea has passed new legislation in 2023 to strengthen protections for virtual asset users through enhanced record-keeping and transparency requirements. In contrast, China has continued to implement strict bans on cryptocurrency exchanges.
Elsewhere, countries like Singapore and Thailand have adopted more crypto-friendly stances, easing regulations to attract investment and support their digital asset markets. Singapore has introduced a comprehensive regulatory overhaul, imposing stricter standards on crypto service providers while also expanding the scope of regulation to cover a broader range of crypto-related activities. Thailand’s Securities and Exchange Commission has made significant updates to its crypto regulations, including the removal of investment limits for retail investors in certain digital tokens.
Emerging markets such as Nigeria are also embracing cryptocurrency while establishing clear guidelines to foster its use for financial inclusion and cross-border payments, reflecting a more nuanced approach globally as regulators seek to balance innovation and consumer protection through a combination of targeted rules, enforcement actions, and collaborative efforts with the private sector.
HK’s continuous effort in becoming Web3 hub
The regulatory landscape in Hong Kong has been evolving. The city’s efforts to establish itself as a digital asset hub have faced challenges, with the collapse of the local exchange JPEX and the difficulties faced by virtual banks in expanding into the Web3 space due to regulatory hurdles. A pair of Hong Kong investors have launched a civil lawsuit against JPEX, seeking to recover losses from the exchange’s alleged collapse in 2023, highlighting the risks and lack of regulation in the city’s crypto industry.
Hong Kong is planning to introduce even stricter crypto regulations in the next 18 months, including specific legislation targeting stablecoins, as it seeks to position itself as a global fintech hub. The government aims to establish a sound crypto exchange system and is expected to launch stablecoins by the end of 2024, while the focus will be on strengthening oversight and ensuring the new laws are effective and enforceable. The city is also considering adding Bitcoin to its federal reserves, following a similar proposal from former President Trump.
Hong Kong’s virtual banks, which currently hold only 0.3% of retail bank assets, are facing regulatory hurdles as they look to expand into the lucrative Web3 space, with account opening difficulties for crypto and blockchain companies cited as a major challenge. However, a Hong Kong legislator remains optimistic about the virtual banks’ “enormous potential” if given clear government support and a strategic blueprint for Web3 development.
Wrapping up
Amid these regulatory developments, the crypto industry has also grappled with an alarming rise in financial crimes and scams, further highlighting the challenges that continue to plague this rapidly evolving landscape. As the regulatory landscape continues to evolve, the need for clear guidelines, effective enforcement, and collaborative efforts between the public and private sectors has become increasingly apparent. The OAX Foundation is positive to see progress in particular in Hong Kong. Although its regulatory framework remains to lack clarity, it is a necessary step to move the industry forward as well as building towards the aim of a digital asset hub.
Disclaimer: The above is an opinion piece written by an authorized author, but in no way represents the official standpoint of OAX Foundation Limited, nor should it be meant to serve as investment advice.
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