Cryptocurrencies have been around for over a decade, and the regulatory landscape surrounding them has been evolving. In 2024, the crypto industry is expected to continue to grow and mature, with new regulations being introduced to help protect investors and ensure that the sector remains stable.
According to a report by PwC, significant progress has been achieved in the worldwide regulation of digital assets in 2023. Nevertheless, there is more to accomplish. This report delves into crucial subjects that will influence the industry’s future. It covers critical areas such as the expenses associated with global operations, regulatory frameworks and policies on a global scale, international prudential standards, the impact of the European Union’s Markets in Crypto-Assets Regulation (MiCAR), and updates on regulations in more than 40 jurisdictions.
Cryptocurrencies boast features like decentralisation and self-regulation, freeing participants from centralised control and fostering user trust. This decentralised environment provides a fairer playing field for everyone involved.
The widespread acceptance of crypto is evident, with a Mastercard survey revealing that 93% of financial institutions foresee their clients using cryptocurrencies for transactions and investments. Additionally, 40% of consumers in the Americas, Africa, and the Middle East plan to use digital currencies for purchases in 2022.
Despite the growing popularity of crypto, its decentralised and self-regulated nature, coupled with an emphasis on user anonymity, poses challenges to compliance with regulatory measures like Know-Your-Customer (KYC), Customer Identification Procedures (CIP), and Prevention of Money Laundering (PLA).
The US Treasury Department identifies cryptocurrency as a “significant detection problem” because it facilitates illegal activities such as tax evasion. So, it’s essential to be well aware of the taxation laws of the country where you reside; for example, if you are from India, do read and learn about crypto tax in India. The 2022 Crypto Crime Report by Chainalysis highlights a surge in cryptocurrency-based crime, reaching a record $14 billion in 2021, up from $7.8 billion in 2020.
Responding to these concerns, the Biden administration has recently proposed measures to tighten regulation in cryptocurrency markets and transactions. The initiative aims to broaden regulatory coverage, including “cryptocurrencies and crypto asset exchange accounts and payment service accounts that accept cryptocurrencies.”
In Europe, financial institutions are also taking steps towards cryptocurrency regulation. The European Union (EU) has introduced regulatory proposals for Markets in Crypto-Assets (MiCA), emphasising a proactive stance. The European Central Bank’s activation of the Digital Euro Project in July 2021 indicates a recognition of the potential impact of cryptocurrencies in the European market. As the regulatory landscape evolves, the crypto community must adapt to balance innovation and compliance.
The world of cryptocurrency is constantly evolving, and so are the regulations surrounding it. Cryptocurrency regulations vary from country to country, and keeping up with the ever-changing landscape can be challenging. In the United States, cryptocurrencies are not considered legal tender, but cryptocurrency exchanges are permitted, and their regulation varies by state. The US continues to progress in developing federal cryptocurrency legislation.
According to the World Economic Forum’s Global Future Council on Cryptocurrencies, there has been no internationally coordinated regulation of cryptocurrencies. However, international bodies have been working on assessing risks and appropriate policy responses to the rise of cryptos.
In Australia, the government has introduced a new bill requiring cryptocurrency exchanges to register with the Australian Transaction Reports and Analysis Centre (AUSTRAC) and comply with anti-money laundering and counter-terrorism financing (AML/CTF) regulations.
In the United Kingdom, the Financial Conduct Authority (FCA) has banned the sale of cryptocurrency derivatives to retail investors, citing the potential harm they pose.
In India, the Reserve Bank of India (RBI) has prohibited banks from dealing in cryptocurrencies, citing concerns over money laundering and consumer protection.
As cryptocurrencies continue to grow in popularity, more countries will likely introduce regulations to govern them. Hence, it’s essential to understand the trends introduced in crypto compliance.
The crypto industry is evolving rapidly, and along with its growth, new trends are surfacing in crypto compliance. Here are some noteworthy developments to keep a close eye on:
As the crypto industry expands, global regulators are becoming increasingly vigilant. In 2024, there will likely be heightened regulatory scrutiny aimed at safeguarding investors and maintaining the stability of the crypto market. Expect new regulations to be introduced for this purpose.
Decentralised Finance (DeFi) stands out as one of the most thrilling trends in the crypto industry. DeFi platforms empower users to access financial services without traditional intermediaries like banks. However, these platforms operate with minimal regulation, making them susceptible to fraud and illicit activities. Anticipate an upswing in regulatory scrutiny of DeFi platforms in 2024, with new rules introduced to protect investors and ensure platform stability.
Stablecoins, cryptocurrencies pegged to the value of stable assets like the US dollar, are gaining popularity in the crypto industry. Offering a means to avoid the volatility associated with other cryptocurrencies, stablecoins are on the rise. Yet, their largely unregulated status exposes them to fraud and illegal activities. In 2024, expect increased regulatory attention on stablecoins, with the introduction of new rules to safeguard investors and maintain stability.
In the ever-expanding world of crypto, interoperability is becoming crucial. With the introduction of numerous cryptocurrencies, ensuring their seamless collaboration is increasingly challenging. 2024 will likely witness a greater emphasis on interoperability, introducing new standards to facilitate smooth interactions between different cryptocurrencies.
Artificial Intelligence (AI) is gaining prominence in crypto compliance. Its applications include identifying fraudulent transactions, monitoring compliance, and ensuring businesses adhere to regulations. In 2024, expect a surge in the utilisation of AI in crypto compliance, with the introduction of new tools to aid businesses in maintaining compliance.
The outlook for crypto compliance is a realm of endless possibilities, a constantly changing ecosystem. Although regulatory clarity is emerging, its complete shape remains to be determined. Amidst this uncertainty, key trends are evident.
Growing institutional involvement will require strong AML/KYC measures, and AI-driven tools will simplify complex crypto transactions. Decentralised solutions and self-regulation aim to balance innovation with accountability, while privacy concerns demand nuanced user protection. The future of crypto compliance relies on collaboration, fostering responsible growth and innovation, and ensuring a secure and sustainable future for all.
Author Bio
Snehal Waghmare is a Content Promotion Specialist. With 3 years of expertise in enhancing online visibility through strategic optimization, Snehal not only enhances online visibility but also crafts engaging content that demystifies the world of digital assets. Connect with her on LinkedIn for insightful content and updates on the latest trends in the crypto realm.
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