2022 will surely be remembered as a year of crypto discontent: one in which the price of Bitcoin crashed three times, many large companies went bankrupt, and the industry saw a series of significant layoffs. However, it was a pivotal year for cryptocurrency regulation around the world. Although some regulatory developments are worrisome in terms of their tougher stance on digital assets, their effect could help the industry mature in the long run.
Watching the important regulatory events of 2022 could fuel optimism for the future. The controversial policy to restrict proof-of-work (PoW) mining was supported in New York, but a similar one failed in the European Union. In some jurisdictions, such as Brazil and Russia, cryptocurrencies are certainly gaining momentum.
Of course, there were many more milestones to remember, but Cointelegraph tried to pick those that represented larger regional trends.
The Crypto Asset Markets Bill
It is fair to put the European Markets in Crypto Assets bill first because it has passed all stages of voting in the European Parliament and should become law in 2024. The comprehensive crypto framework was first proposed by the European Commission in September 2020 and has worked its way through the various stages of deliberations ever since. Some in the industry, like Binance CEO Changpeng Zhao, hope it will become a regulatory standard copied around the world.
The bill includes a transparent licensing regime, with the European Securities and Markets Authority designated as the responsible body. The provisions include strict criteria for stablecoin operators and increased legal liability for crypto influencers. Positively, a proposed amendment to the bill that would have effectively banned PoW mining and the incomprehensible 200 million euro ($212 million) limit on daily stablecoin transactions did not make it to final draft. The bill represents a moderate approach, with an understandable emphasis on investor protection.
Also read: The UK’s plan to regulate cryptocurrencies and the possible end of a favorable regime for cryptocurrency licenses in France.
Lummis-Gillibrand v. Warren-Marshall
Unlike the European Union, in the United States, the race towards comprehensive legislation has only just begun this year. The good news is that there are plenty of contenders.
A joint draft by Senators Cynthia Lummis and Kirsten Gillibrand opened the competition in June. The highly anticipated Responsible Financial Innovation Act (RFIA) contains a division of powers among federal regulatory agencies. Under the bill, the Commodity Futures Trading Commission would regulate investment contracts, which the RFIA qualifies under the new term “ancillary assets.” It also defines decentralized autonomous organizations, clarifies taxes on crypto mining and staking, and launches a report on the highly controversial topic of retirement investing in digital assets.
There are several bills dedicated to stablecoins. The first, sponsored by New Jersey Rep. Josh Gottheimer, would have the Federal Deposit Insurance Corporation back stablecoins as fiat deposits. The second, introduced in September, aims to ban algorithmic stablecoins for two years.
The antithesis of the Lummis-Gillibrand bill is the Digital Assets Anti-Money Laundering Act, introduced by Senators Elizabeth Warren and Roger Marshall in December. It would ban financial institutions from using digital asset mixers and regulate crypto ATMs. Non-hosted wallets, cryptominers, and validators would all have to report transactions greater than $10,000. Senator Warren has promised to draft comprehensive crypto-regulatory legislation that favors the United States Securities and Exchange Commission in the role of regulator.
Also read: The Cryptocurrency Consumer Investor Protection Act and the Cryptocurrency Exchange Disclosure Act by Representative Ritchie Torres.
Russia Gives Crypto a U-Turn
One of the biggest markets for crypto mining, Russia, has made this year memorable for all the wrong reasons. Achieving the status of the most sanctioned state in the world, it joined the club of countries that consider cryptocurrencies as a tool to mitigate their exclusion from the global financial system. Before the invasion of Ukraine on February 24, the discussion on national crypto regulation was defined by the opposing views of the central bank and the finance ministry. While the central bank has strongly opposed attempts to legalize cryptocurrencies, the Finance Ministry has taken a more moderate approach.
The balance changed in the spring when the central bank issued the first license for digital assets. Senior officials publicly scoffed at the option to use Bitcoin (BTC) as a foreign trade currency, and the deputy energy minister has proposed legalizing crypto mining. Since then, the Russian State Duma has considered at least three bills. One bill would legalize mining under an experimental regime and the second would include cryptocurrencies in the national tax code. The third, which prohibited digital financial assets as payments within the country, had already obtained the president’s signature.
Also read: What we know about Iran’s use of crypto for foreign trade.
Crypto Mining Moratoriums in the US and Canada
Perhaps the most disturbing regulatory developments this year occurred in the US state of New York and the Canadian province of Manitoba. Both regions, famous for their attractive natural conditions for crypto mining, decided to impose moratoriums on crypto mining operations. This option has remained on the table since the beginning of the global discussion about the environmental drawbacks of proof-of-work cryptomining, with the less energy-intensive proof-of-stake (PoS) consensus mechanism touted as a more sustainable alternative.
In particular, the New York moratorium does not prohibit PoW mining in principle, leaving the right to operate on the exclusive condition of using 100% renewable energy sources. Once again, he links the discussion to the “clean energy” debate as crypto miners and advocates prepare their arguments to win over public opinion. Although only two small regions have initiated moratoriums, the great battle between PoW and PoS supporters is far from over.
Also read: Bitcoin miners are rethinking business strategies to survive in the long term, and Kazakhstan is among the top three Bitcoin mining destinations after the United States and China.
Brazil legalizes cryptocurrencies as a payment method
At the end of November, the Brazilian Chamber of Deputies approved a regulatory framework that legalizes the use of cryptocurrencies as a method of payment within the country. Although the bill does not make cryptocurrencies legal tender as it did in El Salvador, it is still important as it lays the groundwork for a comprehensive regulatory regime.
The news may seem small compared to the grand narratives about regulation in the United States or Europe. Still, it represents a continuing trend of crypto-friendly movements in Latin America. While Asian jurisdictions have been sending prohibitive signals in recent years, with Washington and Brussels busy embracing their cautious approaches on digital assets, Latin American countries have shown bold strides toward adoption. Honduras attracts tourists to Bitcoin Valley, El Salvador continues to push its Bitcoin agenda, Paraguay paves the way for cryptocurrency regulation, and the Argentine province of Mendoza has begun accepting cryptocurrency for taxes and fees.
also rea: Kenyan legislation establishes crypto taxes, Nigeria implements its central bank digital currency, and the Central African Republic adopts Bitcoin as legal tender.
