Source: TaxDAO
The World Economic Forum (WEF) released the white paper "The Road to Crypto-Asset Regulation: A Global Approach" in May 2023. Since then, the World Economic Forum has continuously updated its findings to keep up with the ways in which different countries and economic regions are responding to the challenges of introducing cryptocurrencies.
1. Why does the World Economic Forum white paper recommend a global framework for regulating cryptocurrencies?
As data policy and blockchain expert Arushi Goel points out: "Like some other emerging technologies, regulating this ecosystem (crypto assets) is like walking a tightrope - it requires a delicate balance between preventing harm, protecting users, and promoting innovation."
In recent years, the crypto industry and the technology behind it, which has great potential, have flourished. When the borderless nature of crypto assets conflicts with the traditional economic and social order, it becomes necessary to implement a unified regulatory framework. However, this also faces many challenges.
2. Challenges of Global Cryptocurrency Regulation
Different jurisdictions do not have a unified definition, classification and tax system for the crypto asset market. Participants in crypto transactions are often troubled by misunderstandings of relevant concepts and systems, and do not have a thorough understanding of financial risks.
Arbitrage refers to the practice of buying cryptocurrency from one entity and selling it to another almost immediately. The aim is to profit from marginal price differences between different jurisdictions that have different regulations and have independently developed financial frameworks. This, of course, is a headache for regulators in different jurisdictions, who have to apply different tax laws and legislative guidelines to such transactions. This further hinders the development of overall regulation of the crypto ecosystem. Insufficient coordination between multiple law enforcement agencies hinders the supervision and regulation of the crypto industry and the establishment of a coherent and consistent regulatory framework.
3. Progress since the release of the World Economic Forum White Paper
In the face of the aforementioned challenges, some countries and regions have attempted to develop regulatory frameworks for crypto assets with varying degrees of success. For details, please see the figure below.
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4. Regions where crypto regulation has made progress
The World Economic Forum pointed out that since the release of the white paper, the following changes have occurred in crypto regulation in various countries or regions:
4.1 Changes in U.S. Cryptocurrency Regulation
Although the World Economic Forum pointed out that progress in U.S. crypto regulation is currently stagnant, it has achieved the following:
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4.2 Changes in EU Crypto Regulation
4.3 Changes in UK cryptocurrency regulation
4.4 Changes in Cryptocurrency Regulation in Asia
Asian countries have different approaches to cryptocurrency regulation:
Japan recognizes cryptocurrencies as legal tender and recently introduced exchange trading identification rules aimed at combating money laundering.
South Korea passed the Virtual Asset User Protection Act, which aims to make cryptocurrency transactions safer and came into effect on July 19, 2024. India lifted the ban on cryptocurrency trading in 2020, but regulatory progress has stalled since then. However, India's Cryptocurrency and Official Digital Currency Regulation Bill has bright prospects. Meanwhile, in South America, Brazil took steps toward crypto regulation in June 2023.