How effective are digital assets regulated?

All over the world, the regulation tries to keep up with the explosive growth of digital assets, from cryptocurrencies to initial coin offers. Below are a snapshot at how the global landscape developed in October. The rules will develop, since regional and national legislators design new guidelines and work out courses that show what companies can and cannot do.

What is the big picture?

The global political design in terms of digital assets is very fragmented, sometimes because a large part of it was a scramble to keep up with the market changes and emerging threats. Another factor is the lack of authority that supervises a truly international effort. While the banking supervisory authorities in the Basel Committee on Banking Supervision on Global Guidelines agree, there is no equivalent convenient body for digital assets.

Some believe that even the Financial Stability Board, which the finance ministers belong to some of the largest economies in the world, is not a sufficiently wide forum, since the questions about digital assets beyond finance are extended to areas such as technology and society in general

In the USA, Gary Gensler, who recently appointed chairman of the Securities and Exchange Commission (SEC) and former chairman of the Commodity Futures Trading Commission (CFTC), is viewed by some as a driving force for the necessary global coordination. He hunted all weapons in the air, first encouraged crypto trading platforms to register with the SEC, and then urge the congress to give him the authority to regulate what he calls the "wild west" of the markets.

Smaller countries-and some US states-were also pioneers. Some try to quickly develop digital asset regime to win transactions, such as the US state of Wyoming, which has said goodbye to more than 20 crypto-related laws, including a new banking charta that is specially tailored to crypto companies. But some nations act aggressively, such as China, which in September declared all activities related to cryptocurrencies to be "illegal". In the meantime, El Salvador has taken the unprecedented step to make the cryptocurrency Bitcoin a legal means of payment.

What happens in the USA?

The regulation of digital assets is almost as fragmented in the United States as in the rest of the world. Gensler argues that he should be regulated because cryptocurrencies are essentially securities. The Federal Reserve also plays a role, most obvious by restricting the crypto and digital asset activities of the already regulated large banks.

The CFTC has the supremacy for futures and other derivatives based on digital assets. State supervisory authorities largely take care of the licensing of money transfer companies, a category that belongs to some cryptocurrency companies.

Almost all regulatory systems are, however, older than digital assets. "Everyone spends their time to find out what kind of product is?

If the SEC is of the opinion that the digital asset is a security, according to Grant Fondo, a lawyer at Goodwin, the SEC can demand from his stock exchange that the sale of digital asset is hired. This is probably the case with some tokens that were initially issued via Coin offers, the symbolic equivalent of a stock exchange of stocks.

The Financial Crimes Enforcement Network (fincen), which monitors the risk of financial crime, and the Ministry of Justice could also be interested in many types of activities with digital assets. Money transfer licenses of payment companies can be granted at the state or federal level.

The Seclei Chairman Gary Gensler launched all weapons and pushed to regulate the “wild west” of the markets

The case law plays an important role in the development of the basic rules. "We see a lot more on the enforcement front than on the regulatory front," says Massari, referring to the importance of cases such as rippler -based fight against the classification of the payment of payment by the SEC as publicly traded security. "When the court says we are voting XRP [Ripple’s Payment Token] is not a security.

The greatest hope of a national orientation is in dollar-based stable coins, a form of cryptocurrency, the value of which is linked to the Greenback. The United States is so concerned about the effects on the financial stability that the heads of all of its most important regulatory authorities said this month that regulations are "urgently needed" and that the Coin’s operators should be treated like banks.

What about other important markets?

The United Kingdom's approach is similar to that of the United States because existing laws are applied to products and situations for which they were never intended. The United Kingdom has the advantage that it has less domestic financial supervisory authorities, but its regulatory heritage makes some problems more complicated.

Ben Regnard wine, a regulatory lawyer at Allen & Overy, names the fact that the United Kingdom has two regimes for “security tokens” in contrast to the uniform US definition. Depending on the characteristics of cryptocurrency, it can be called equity or debt title, a collective investment system or an e-money. Alternatively, it could be unregulated. His colleague Bob Penn says that the old laws on which the regulation of digital assets are based are "very clear", "speaking legally but often difficult to agree" [The Old Rules] with non-traditional products ".

Singapore has long been at the top of the innovation. This month, his head of regulation Ravi Menon, who heads the Monetary Authority of Singapore (MAS), confirmed the goal of the city state to be a leading crypto player. "We believe that the best approach is not to restrict or forbid these things," he said.

lawyer Tju Liang Chua from Drew & Napier says that the rules are "relatively clear about global jurisdiction". The Securities and Futures Act from Singapore contains a comprehensive list of characteristics that define what a securities looks like. Lawyers then equalize digital assets to determine whether the asset is a security. Singapurs recently introduced Payments Services Act expressly defines certain regulated, non-secure digital token such as Bitcoin and defines regulated e-money or stable coins, the issuers of which need a special license.

Another novelty in Singapore's landscape is that "there is pretty much just a regulatory authority that counts," says Liang. MAS has the authority of regulating payment transactions, the financial behavior and the regulation of supervisory law and the central banking system and also has a double mandate to promote the development of the financial sector.