Global Crypto Regulations Updates 2023

The security of Crypto investors is always been a dicey topic! Even though the crypto exchanges are decentralized and promise higher gains to the investors, the turbulent crypto markets, cyberattacks, and lack of crypto regulations to protect investors’ interest, call for a proper regularity framework across geographies. The year 2022, had record-high crypto hacks, with $3.8 billion stolen from crypto exchanges, as reported in the latest Chainalysis report.

Governments of various countries are taking this matter seriously and already working on making crypto regulation frameworks to protect crypto investors. The U.S. Securities and Exchanges Commissions (SEC) made crypto assets and emerging technology regulations, its priority for 2023. SEC Chair Gary Gensler proposed to include Crypto as an asset in federal custody requirements. This will require the crypto exchanges to get regulatory approvals. These changes will make it mandatory for custodians including crypto exchanges to maintain certain federal and state registrations and get approvals for crypto products.

European Union (EU) approved comprehensive Market in Crypto-assets (MiCA) regulations with European Council to ensure that crypto exchanges follow the regulations. This will prevent money laundering, protect crypto investors, and increase accountability of crypto exchanges, environmental impact, and stablecoins. These rules are aimed to minimize the volatility of cryptocurrencies by maintaining collaterals in form of reserves in US dollars. MiCA regulations require stablecoin issuers to maintain minimum reserves to prevent crypto crashes. As part of the rule, these reserves must be protected from insolvency. MiCA required EBA to maintain a list of non-compliant crypto-assets service providers. MiCA covers areas such as transparency, disclosure, authorization and supervision of transactions.

Along the same lines, the UK government also sets out rules to regulate crypto and protect consumers. The proposed rules will require financial intermediaries and custodians to facilitate crypto transactions and safely store consumer assets, and strengthen rules around lensing crypto assets.

In Canada, Provincial securities and derivative regulations set a regulatory framework for digital assets, which will require the crypto exchanges and crypto transfer service providers to register as Money services businesses (MSB). Canadian Securities Administrators (CSA) published guidelines in February 2023, for crypto exchanges to get registered who want to operate in Canada. The registered crypto exchanges are required to abide by rules to segregate crypto assets held for local clients and should not sell stablecoins without CSA’s permission. Companies not getting registered within 30 days are expected to offload Canadian users and block the jurisdiction.

There are many countries that are still working on bringing regulatory frameworks for crypto-trading and the main intention is to protect the consumers as well as to make crypto markets a safer place, this will allow wider adoption of crypto assets. The Crypto-exchanges are decentralized and not governed by any central authority, the risk of investment in crypto-assets is completely born by the consumer, sighting the crypto hacks in the recent past, it is important to bring in regulatory laws to protect the interest of crypto investors, at BlockChainSentry, we believe that decentralized crypto-exchanges offers a new investment avenue for the investors and given the cyber risk associated with these exchanges, these regulatory measures that governments are taking are required to be more stringent and implemented to stabilize the decentralized finance industry.?