The year 2021 saw the proliferation of cryptocurrencies as an asset class. And 2022 might be the year of crypto regulations. Governments worldwide are keen on fast-tracking appropriate policies that mitigate risks involved in crypto while fostering innovations.
The Year 2021: A Recap
The total crypto market capitalization touched a record $3 trillion at one point in 2021. Despite the regulatory uncertainty, nearly 20 million Indians entered the digital asset bandwagon.
Meanwhile, global crypto adoption jumped by over 880%, according to blockchain data platform Chainalysis. Experts attribute this remarkable surge in adoption to the buzz around NFTs, metaverse, and Web 3.0.
Yet, regulations did not catch up with the developments around crypto. Governments found themselves in a catch-22 situation. Stringent regulations or a complete ban would hamper crypto’s phenomenal growth potential. On the other hand, the absence of regulation meant turning a blind eye to the risks of extreme volatility and speculations.
However, governments have been experimenting with crypto recently, and many of them are on the cusp of announcing positive regulations.
The United States of America
The White House is preparing an executive order on cryptocurrencies, to be announced next month. The directive will outline the government’s strategy on digital assets, focusing on the challenges and opportunities posed by the emergence of cryptocurrencies, according to reports from Bloomberg.
On a similar note, members of the British parliament are pushing for the launch of the Crypto and Digital Assets All Parliamentary Group. The group intends to come up with new legislation that will help the UK’s crypto industry foster innovation.
Despite the crypto mining and trading ban, China wants to join the Non-Fungible Token (NFT) party. The government-backed Blockchain Services Network (BSN) wants to build a vibrant Chinese NFT economy, and BSN is putting in place the necessary infrastructure to provide services to NFT companies.
One of the earliest countries to recognize crypto assets as legal, Japan has further eased crypto token listing regulations on exchanges. The news comes as a relief to Japan’s booming trillion-dollar crypto market. Before this, token listings were subjected to a strict screening process under the Japanese Virtual Currency Asset and Exchange Association (JVCEA) that took over six months.
Giving in to growing metaverse popularity in Turkey, President Recep Tayyip Erdoğan has encouraged members of his party, AKP, to research metaverses, cryptocurrencies, and how they can be used in transactions, according to reports from the Daily Sabah newspaper.
Thailand too is making life easier for crypto investors by scrapping its plans to impose a 15% withholding tax on transactions. Last week, the country’s Ministry of Finance, the Bank of Thailand, and the Thai Securities Commission jointly announced plans to regulate cryptocurrency as a means of payment.
The latest to join the list has been India’s new crypto taxation. As part of the 2022 budget speech, Finance Minister Nirmala Sitharaman announced a flat 30% tax on crypto income.
The budgetary move is good news for the crypto industry, as the government had hitherto expressed mixed opinions on the subject of regulations. Despite the high-interest rate being charged, the provisions recognize crypto as a legitimate crypto asset, and that’s the main thing.
Meanwhile, a crypto bill is also in the pipeline and is expected to become law later this year. Though limited information is available, the bill aims to regulate crypto assets while fostering an atmosphere of innovation based on blockchain technology.
Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.
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