The rise of cryptocurrencies in recent years has attracted the attention of various financial regulators across the globe. In this article, we will discuss some of the top regulatory agencies tasked with ensuring that crypto players operate in accordance with the stipulated laws.
Leading Crypto Regulators
The US Securities and Exchange Commission
The SEC (Securities and Exchange Commission) is a United States government agency responsible for enforcing securities rules, protecting investors, and blocking anyone from manipulating financial markets.
This regulator has classified crypto assets as securities using the Howey test, and that’s why it oversees the crypto market. However, there has been a long-standing debate on whether cryptocurrencies should be labeled as securities or commodities. Despite the unclarity on classification, the Securities and Exchange Commissioners, led by the agency’s Chair Gary Gensler, have leveled several lawsuits against crypto players, accusing them of offering unregistered securities. The latest lawsuit targeted crypto exchanges Binance and Coinbase. Other players in the blockchain industry that have been charged by the SEC include Genesis, Kraken, FTX, Paxos, and Gemini.
US Commodity Futures Trading Commission
The CFTC (Commodity Futures Trading Commission) is another US government agency with an interest in regulating the crypto space. It ensures that the derivatives market in crypto is not manipulated. Over the years, the regulator has claimed that cryptocurrencies are commodities, not securities.
US Internal Revenue Service
The IRS (Internal Revenue Service), a US agency responsible for collecting taxes from Americans, is also involved in crypto regulation. While the SEC and CFTC classify crypto assets as securities and commodities, respectively, the IRS labels them as property. For this reason, the tax collector argues that crypto investors holding crypto tokens for a year or more must file capital gains taxes.
Other Agencies Regulating Crypto in the United States
Along with the IRS, SEC, and CFTC, there are other US agencies that oversee the crypto industry. They include the Financial Crimes Enforcement Network, which ensures all crypto exchanges adhere to anti-money laundering policies; the Federal Trade Commission, which aims to curb crypto fraud; and the Office of the Comptroller of the Currency, responsible for overseeing crypto and FinTech startups.
European Union Parliament
The EU Parliament is the biggest player in Europe when it comes to cryptocurrency regulations. Earlier this year, the institution approved the Markets in Crypto Act, famously known as MiCA. This rulebook is meant to protect investors and hold crypto players accountable for any loss of user assets.
The MiCA framework will allow the European Securities and Markets Authority to ban crypto exchanges and brokers from operating in the EU countries if they violate stated rules. The crypto rulebook is expected to take effect in mid-2024.
UK Financial Conduct Authority
The FCA (Financial Conduct Authority) is a United Kingdom agency tasked with overseeing the traditional finance and crypto industries. In February, the FCA announced its plans to formulate a “comprehensive” regulatory framework to protect crypto investors. The regulator said the rules would be consistent with those imposed on traditional finance players.
A few months after the FCA announcement, UK Prime Minister Rishi Sunak said clear regulations will allow the United Kingdom to realize its dream of becoming a crypto hub.
People’s Bank of China
This is the Central Bank of China. It is one of the many financial regulators in the world that have put tough regulations on crypto. Five years ago, it prohibited China-based cryptocurrency exchanges from operating in the country. Last year, the People’s Bank of China instructed all FinTech firms in the Asian nation to refrain from processing crypto-related transactions.
Despite these restrictions, the Chinese people are still allowed to own cryptocurrencies.
Japan Financial Service Agency
Japan’s FSA (Financial Service Agency) has been given the mandate to oversee crypto assets under the Payment Service Act. Unlike China, Japan has crypto-friendly regulations. The FSA requires all exchanges and brokers operating in the country to implement anti-money laundering policies.
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