The "Crypto Winter" and the decline in values have numerous causes, but two recent events indicate that the emerging asset class is here to stay. The first step was the proposal of federal legislation to regulate digital commodities by a bipartisan group of U.S. Senators in August 2022. Additionally, Coinbase, a U.S. cryptocurrency exchange, teamed up with BlackRock to offer institutional customers of the asset management direct access to cryptocurrency.
Digital assets are now subject to a patchwork of state-level legislation in the US, which leaves room for loopholes in consumer fraud protection.
The senators hope that the Digital Commodities Consumer Protection Act of 2022, which would grant the Commodity Futures Trading Commission sole control over the spot market for digital commodities, will result in stronger consumer protections, market integrity, and innovation.
Participants in the cryptocurrency sector hailed the Act for establishing explicit federal control of the markets for digital commodities. The regime that offers thorough client safeguards and control to spot crypto commodities markets in the U.S., according to Sam Bankman-Fried, Chief Executive Officer of FTX, will be welcomed by the crypto arena as both beneficial and successful. Faryar Shirzad, Chief Policy Officer of Coinbase, underlined the importance of a federal regulatory framework for cryptocurrencies. It guarantees that the United States will follow a similar policy in other countries.
Hong Kong and Singapore have taken the lead in developing the regulatory frameworks necessary for resilience and confidence in the cryptocurrency markets, according to a recent webinar co-hosted by Regulation Asia and Nasdaq. The Anti-Money Laundering and Counter-Terrorist Financing Ordinance have been amended by the Hong Kong Government to create a new licensing system for Virtual Asset Service Providers (VASPs). Stablecoins, particular governance tokens, as well as Bitcoin and other altcoins, are all considered "virtual assets" in Hong Kong.
Stratford Finance's Angelina Kwan
"All the existing requirements for other financial institutions - internal control guidelines, fund-management code of conduct, regulation of automated trading services - will apply to virtual asset license holders," said Angelina Kwan, chief executive officer of Stratford Finance Ltd.
A new Financial Services and Markets Bill is being prepared by Singapore as well. "There's a vacuum in that the Payment Services Act does not govern providers that set up company in Singapore but do not offer services in Singapore," said Janice Goh, a Partner at Cavenagh Law LLP, a partnership with Clifford Chance in Singapore. All VASPs having a place of business in Singapore will need to be licensed under the new Act.
Additionally, a Singaporean investor was successful in getting a non-fungible token transfer ban ordered by the courts (NFT). It's a first in Singapore, Asia, and the world where it acknowledges an NFT as an asset in the context of a business dispute, according to Goh.
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