Cryptocurrency Markets Regulations Overview and Prospects by Huobi Pro
When there is no order, the only available option is chaos. This is the reason we have regulations covering virtually every facet of human life. The innovative blockchain technology is not left out. Although it’s been around for about nine+ years now, regulators are only recently beginning to give it due attention. Huobi Pro’s Academy report on the global blockchain and cryptocurrency industry has a section on crypto markets regulations, overviews and prospects.
Regulatory authorities around the world are gearing up to formulate standard crypto regulatory frameworks. As everyone looks forward to these developments, the Global Report says we should pay close attention to the following future trends. These future trends are briefly discussed below.
First future trend to pay attention to is that the US may become a good regulation example and be followed by other countries. Known as a pacesetter in the US, has always adopted a proactive approach to innovative developments, especially in the technology field. It is doing this through the SEC, who is a frontline regulator in the cryptospace, by imposing more strict compliance rules concerning licenses, security offering registration, taxation and other things it ordinarily does in the similar securities market. After taking the bold step to be the first country to classify crypto assets as securities, other countries like Germany and Netherlands also followed suit. Also, NASDAQ’s CEO recently announced that they would be adding crypto assets trading to their services. This further strengthens the view that the US will be regulating crypto assets like a security. In that case, other countries would likely do likewise.
Second, regulations have been effective and successful, only because of some centralized body. Thus, both centralized regulators and self-regulatory organizations will play important roles in the regulatory landscape of crypto. Typical examples are the forming of Japan Cryptocurrency Business Association (JCBA) by 16 registered cryptocurrency exchanges after the Coincheck breakout. There is also the Korean Blockchain Association (KBA), established in December 2017, and currently has 23 cryptocurrency exchanges as members. These centralized, self-regulatory bodies all have one aim: to set up investor safety standards and related market standards of the crypto market.
Third future trend to expect is that efforts to improve regulation systems by leading countries and regions will speed up the formation of global joint regulation among country unions. At the March 2018 G20 Summit, some countries presented their regulation proposal for the crypto market. Even Germany and France were known to have sent their own EU focused proposal to the host country, ahead of the Summit. Although there was no concrete agreement reached on crypto regulations at the end of the summit, we can expect this to change in the coming future.
Huobi Pro Research made an analysis of the current status of cryptocurrency regulatory policies around the world. Five evaluation parameters were used in the research. They are:
- Whether crypto assets are permitted to be used as a payment tool
- Whether crypto assets exchanges are permitted to operate
- Whether crypto assets crowdfunding is permitted
- Whether investments in crypto assets are permitted
To aid speedy comprehension, the researchers introduced a “Supervision Strictness Index” (SSI) as the output of the evaluation, using the above parameters and varying from one star to four stars. The more stars a country has, the tighter the policies, and the more conservative and unacceptable attitude toward crypto assets. The less stars a country has means the more liberal its approach and attitude towards crypto assets.
North America, predominantly the US, scored three stars, meaning prevailing policies are tight, as crypto assets are deemed to be securities. In Asia, Japan scores two stars as overall regulation is loose, although crypto assets crowdfunding are soon to be released. South Korea scores three stars due to its tight policies that focus on AML. Singapore has always been friendly to the crypto market, thereby scoring just one star, it is expected that the country will always remain friendly even in future. Hong Kong and Russia, like the US, score three stars as policies in both countries are tight and crypto assets are deemed to be securities. However, definite regulations for the market are to be published soon. The UK and Switzerland score one star, not just because regulatory policies are still unclear, but mostly because there are no known restrictions.
As earlier mentioned, we can expect things to become more clear and well structures in the near future, regardless of whether crypto assets are classified as utilities or securities. This report will be first unveiled by Huobi Pro at this month’s Blockchain Festival Vietnam. Purchase your tickets here with a 50% discount when you use the coupon code: WRITE50.