Global Monthly Crypto Regulatory Update


IMF’s paper on the risks on crypto-assets

On September 29, the IMF released a working paper titled “Evaluating Macrofinancial Threats Associated with Crypto Assets.” In this paper, authors Burcu Hacibedel and Hector Perez-Saiz introduced a Crypto-Risk Assessment Matrix (C-RAM) designed for countries to detect potential risks within the cryptocurrency sector, as well as to outline potential regulatory responses. The matrix employs a three-step approach. The initial step involves employing a decision tree to evaluate the macroeconomic significance of cryptocurrencies. Subsequently, the following step entails examining indicators similar to those used for monitoring the conventional financial sector. The final step addresses global macro-financial risks that impact countries’ assessments of systemic risk. Read more

Bank for International Settlements (BIS) – Calls for countries to collaborate on their CBDC designs

Agustin Carstens, the general manager of the Bank for International Settlements (BIS), emphasized the importance of countries establishing legal frameworks that facilitate the implementation of central bank digital currencies (CBDCs). He stated that “it is crucial to meet the public’s demand for forms of currency that align with their needs and expectations.” According to a 2020 report from the International Monetary Fund, approximately 80% of central banks are either restricted from issuing CBDCs due to existing laws or operate within legal frameworks that lack clarity on this matter. In 2022, a BIS survey revealed that 93% of central banks were actively involved in CBDC-related initiatives. The BIS itself has conducted numerous CBDC experiments and has advocated for international collaboration in the development of CBDC designs by countries. Read more

United Kingdom

UK’s online safety bill affecting content on the metaverse

A new bill addressing internet safety, which will extend to cover the metaverse, has been approved by U.K. lawmakers. Companies are mandated to develop strategies for reducing these risks, a stipulation that is anticipated to enhance both online freedom and safety, as per an official government statement. Lord Stephen Parkinson, a member of the Upper House of Parliament, explained that the bill encompasses the metaverse and has been intentionally designed to remain adaptable to evolving technologies, maintaining its relevance over time. Read more

UK’s crypto marketing rules

Starting from October 8 onwards, stringent new regulations concerning the marketing of crypto assets will be enforced by UK regulators, as stated by the Financial Conduct Authority (FCA). These fresh rules encompass prohibitions on incentives such as “refer a friend” bonuses and necessitate the prominent display of risk warnings, akin to those seen on tobacco or certain investment products. Furthermore, these regulations will extend to firms that promote crypto asset products on behalf of other firms and will also encompass non-fungible tokens (NFTs), potentially impacting NFT marketing significantly. Initially, the FCA may consider granting crypto firms additional time to implement specific changes that require more technical work. For instance, companies may be allowed until January 8, 2024, to incorporate a 24-hour cooling-off period. It’s important to note that such concessions are not automatic; businesses must apply for the flexibility. Nevertheless, the fundamental rules will still come into effect on October 8, 2023. Read more


Taiwan issues updated crypto guidelines

Taiwan’s financial regulatory authority has issued a set of guidelines for crypto issuers and companies with the goal of strengthening oversight within the industry. The Financial Supervisory Commission (FSC) has stressed that these guiding principles are designed to enhance customer protection through increased transparency, the implementation of secure asset custody practices, and the reinforcement of internal controls and management procedures within cryptocurrency firms. Under these new directives, crypto issuers will be required to furnish a white paper, while cryptocurrency exchange platforms will be mandated to establish a review mechanism for the inclusion and removal of virtual assets. Additionally, the regulator has specified that companies must segregate the platform’s assets from those belonging to customers. Moreover, foreign entities aiming to serve customers in Taiwan must comply with local corporate and anti-money laundering regulations by registering within the country. Read more

Hong Kong stepping up efforts to combat unregulated cryptocurrency trading

The Securities and Futures Commission (SFC), Hong Kong’s financial regulator, has pledged to intensify its efforts in addressing unregulated cryptocurrency trading platforms within its jurisdiction. The SFC has announced its intention to release a comprehensive list of virtual asset trading platforms (VATPs), including those that are licensed, deemed licensed, closing down, and those with pending applications. This initiative aims to assist the public in identifying potentially unregulated VATPs operating in Hong Kong. Furthermore, the SFC will create a dedicated list of “suspicious VATPs,” prominently featured on its website for easy access. This action follows closely after the recent JPEX crypto exchange scandal, which is estimated to have caused financial losses of approximately $178 million. Read more

India’s 5 points regulatory approach to crypto regulation

India is in the process of developing a regulatory framework for cryptocurrencies, which is based on the joint suggestions provided by the International Monetary Fund (IMF) and the Financial Stability Board (FSB). This effort could potentially lead to the establishment of legal legislation within the next 5-6 months. The recommendations from IMF and FSB regarding cryptocurrencies advocate for the regulation of the crypto market instead of implementing an all-encompassing ban. These recommendations from IMF and FSB serve as a set of regulatory guidelines and suggestions that the G20 countries can use as a foundation for crafting their individual yet collaborative cryptocurrency legislation. Currently, India is actively working on a five-point regulatory strategy, with a particular emphasis on fostering global cooperation, especially in areas like cryptocurrency taxation:

  1. Setting up advanced Know Your Customer (KYC) for crypto companies which covers the Foreign Account Tax Compliance Act (FATCA), and Existing anti-money laundering Standards.
  2. Crypto platforms would be required to release Proof-of-reserve audits on real real-time basis to regulators.
  3. A uniform taxation policy across the nations.
  4. Crypto exchanges could gain the similar status of authorized dealers (similar to banks) under the guidelines of the Reserve Bank of India (RBI).
  5. Key positions may be mandatory such as Money Laundering Reporting Officer (MLRO) for crypto platforms.

Read more


Brazil’s response to the surge of crypto imports

In light of a significant surge in cryptocurrency adoption, Brazil’s central bank is actively pursuing measures to strengthen regulations within the crypto-asset sector. This initiative follows a noteworthy 44.2% surge in cryptocurrency imports into the country from January to August 2023, compared to the corresponding period in the prior year, totaling around $7.4 billion USD. The central bank’s objective is to subject cryptocurrency exchanges and platforms to more rigorous oversight, addressing concerns related to tax evasion and illicit activities. Read  more

Proposal for an off-chain crypto transaction oversight bill in the USA

Typically, transactions that occur off-chain do not get recorded on the blockchain, resulting in the absence of a network record detailing the financial aspects of the transaction. Consequently, the security of off-chain solutions may be more susceptible to hacking and data breaches, depending on their specific implementation. Dated September 27, the Off-Chain Digital Commodity Transaction Reporting Act is a bill that encourages cryptocurrency trading platforms to “submit reports for all transactions to a repository registered with the Commodity Futures Trading Commission (CFTC).” This includes reporting every digital asset swap, whether it is cleared or uncleared, to a registered swap data repository. Furthermore, the act mandates that sales of digital commodities must also be reported to the cryptocurrency repository for transactions. Trading platforms are obligated to report each transaction immediately after its execution. The legislation specifies that “all off-chain digital asset transactions must be reported to a CFTC-registered trade repository within 24 hours, mirroring the requirements for virtually all securities and swaps transactions”. Read more

New York Department of Financial Services’ updated guidelines for crypto coin listing

The New York Department of Financial Services (NYDFS) has put forth updated proposals regarding the listing of cryptocurrencies, with a focus on imposing stricter regulations, especially when targeting retail clients. Licensees will be required to evaluate the legal, reputational, and market risks associated with any new coins, and they must also outline their procedures for delisting a token. In April, NYDFS had previously outlined the criteria for assessing cryptocurrency firms in terms of anti-money laundering and cybersecurity standards, a move that impacted companies like Coinbase and Robinhood. In September, NYDFS updated its list of approved cryptocurrencies (greenlisted coins), which licensees can list or hold without encountering additional regulatory obstacles. Notably, this list now includes Bitcoin (BTC), Ethereum (ETH), and stablecoins issued by PayPal and Gemini. Under the revised guidelines, cryptocurrency companies must establish comprehensive policies in three critical areas: the governance of the listing process, risk assessment of tokens, and monitoring procedures. These policies should be tailored to each company’s unique business model and operations. Importantly, the framework introduces a more detailed process for delisting tokens, requiring companies to specify the events that could trigger the removal of a token and provide a clear execution plan. This includes advance notification to customers and conducting impact assessments. Read more

Prepared by Tautvydas Petrošius, Associate of ECOVIS ProventusLaw


Newsletter SubscriptionGet in touch