In 2024, cryptocurrency regulation will be a hot topic in the financial world. The United States, the European Union, the United Kingdom, Asia and the Pacific are some of the places where major changes in cryptocurrency regulation are expected.
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Regulation is undoubtedly the big topic for this year 2024 in the world of cryptocurrencies and all expectations are on it. If the plans turn out as expected, the bull market will attract the attention of millions of people around the world.
In that troubled river there will be no shortage of major frauds and other crimes, which will draw the attention of government regulatory agencies. The need for clear rules of the game seems to be the next step in an industry that is rapidly moving towards massification. But probably the key to this whole issue lies within the United States.
It is worth mentioning that in other developed markets, such as the EU, the Digital Assets Act, or MiCA, will come into force. All indications are that the more orthodox decentralization enthusiasts will not have a dream year. On the positive side, the various regulatory frameworks will allow companies to have rules and a clear path for growth.
The big unknown in this process is in the so-called decentralized finance (DeFi). In any case, the cards are already stacked and 2024 will be a year of major breakthroughs in the legalization of these digital assets.
In the framework comprising cryptocurrencies and regulation, there are numerous expectations for implementation. However, two fields will be the epicenter of the agencies: anti-money laundering and anti-terrorist financing. If these two items are successfully locked down, regulations will have already done much of the work and there will be little to worry about.
In that case, company conduct and oversight of token sales would be two perfectly tractable issues. However, the big question mark has to do with the SEC's issue about the nature of tokens. According to the US agency, the vast majority of tokens are securities. But the owners of crypto projects do not think so.
The pendulum is swinging on how these assets will be treated: securities, commodities or a new class to be defined. This is another issue that will be addressed in 2024, although it will certainly not be solved this year. As already mentioned, the massification of digital currencies and the possible bull-run will highlight the urgency of the regulatory issue.
It should not be lost sight of the fact that regulators in different jurisdictions have the crypto sector in their sights after the events of 2022. Back then, two events occurred that resulted in the loss of billions from users, the Terra crash and the FTX fraud. From there, many regulators raised some red flags that are not entirely clear to the public. Will they be known in 2024?
As already mentioned, the United States is the strong point of expectations in this game of regulation and cryptocurrencies. And no wonder, it is the largest market in the world and the main source of retail and institutional investors that may exist in the international arena. Basically, any project that wants to succeed must have the approval of the regulators in that country.
The problem is that those regulators do not have the slightest sympathy for the crypto sector. CryptoTrendency has a huge number of publications about SEC and CFTC lawsuits against crypto firms. All in all, the lawsuits by these agencies against ventures in this particular technology area add up to more than 200 cases.
The main motivations of the agencies is to fight against illegal activities. Despite this, it should not be overlooked that in the crypto world there are also good actors that are mercilessly crushed by lawsuits. Generally, industry exponents criticize regulatory authorities for sabotaging technological entrepreneurship. The latter could have negative consequences such as leaving the U.S. lagging behind in this race against other rival powers.
Although some firms such as Coinbase request new rules for the crypto sector, these requests are ignored. The SEC's optics is that cryptocurrencies must adapt themselves to the regulation established about a century ago. This year is unlikely to see the birth of a clear body of law in the world's leading economy. However, it is not all doom and gloom, as there are good intentions to address this issue.
Image generated with Leonardo AI
Two other sectors of great importance are focused on Europe, both in the European Union and in the United Kingdom. In the first case, as mentioned above, the MiCA will come into force. This is one of the most advanced regulations in the world and about which there are great expectations.
In fact, if the uncertainty continues in the United States, it is highly likely that many U.S. firms will move to the old continent. It is still too early to know what the practical effects of this regulation will be among crypto companies. However, it is far better to have flawed regulation than none at all, or so common sense dictates.
In the British Isles there is also an initiative not to treat the crypto sector with its feet when it comes to making it enter the regulatory lane. Thus, since 2020 London is looking to undertake numerous maneuvers to protect crypto companies. As time goes by, they seem to be close to a formula that maintains the balance between the security of the financial world and the stability of these technological ventures.
With the FCA's new adjustments, the UK aspires to become a global epicenter of the crypto world. Whether or not it will achieve this by 2024 depends on whether or not the expectations between regulation and cryptocurrencies that its government has generated are met.
Another area that is impossible to ignore is Asia and the Pacific. Regulatory developments in the area are enormous, with advanced cases such as Singapore and Hong Kong. South Korea and Japan also stand out in this geographic region. Despite the cautious attitude of the latter two, the struggle to become the technological hub will become more acute in 2024.
The latter requires the establishment or consolidation of the bodies of laws regulating the world of cryptocurrencies. Expectations in the countries of the region are high, with China totally out of the equation, at least for the time being.
With all this, it can be taken for granted that 2024 will be a year of big news in the world of regulations. On the other hand, it is worth noting that the rest of the countries could take these first experiences to tackle the complicated issue of cryptocurrencies.
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