After the building excitement surrounding cryptocurrency, there began to be some skepticism about its footing in the mainstream economy. Different countries have stalled and taken a step or two back before regaining momentum in the crypto sector. But the building waves are beginning to crash ashore as world-leading economies are changing the ways they recognize and trade with crypto. Below are some examples of economies around the world pivoting in ways that legitimize the ever-increasing legitimacy of crypto throughout the world.
Up until recently, the Federal Financial Supervisory Authority (BaFin) had not defined cryptocurrency as proper financial instrumentation. That changed on March 3 in a momentous decision by BaFin, in which the definition of crypto assets was changed to the following: “A digital representation of a value that has not been issued or guaranteed by any central bank or public body and is not necessarily linked to a currency specified by law and that does not have the legal status of currency or money, but is accepted as a medium of exchange by natural or legal persons and can be transmitted, stored and traded electronically.” Custodians of cryptocurrency will be required to obtain a license by the end of November, but are officially permitted to transact using cryptocurrency. As of April, 40 different German banks had filed for licenses. The Borse Stuttgart, which is the second biggest financial institution in the country, is among them. Another momentous event happened a month ago, when it was announced that the first “centrally cleared” Bitcoin ETF would be included in Germany’s stock exchange. At the time of the announcement, CoinGeek reported that the new security would eventually also be listed in the U.K., Italy, and Austria.
Around the same time that Germany applied a definition to cryptocurrency, South Korea’s government decided that it would also legalize and regulate crypto. It shouldn’t be a surprise that the nation took such steps. Those that have followed crypto news over the years have known that plenty of early crypto technology and investment came from South Korea. In fact, 2017 surveys revealed that more than a third of employed Koreans were active investors in cryptocurrency. The government has faced harsh critiques in the last few weeks as it was decided that cryptocurrency would be taxed. More noise about cryptocurrency was created after the recent exposure of a child pornography ring. The government is looking into creating an artificial intelligence system to track crypto exchanges and alert authorities of potential exploitation of children and/or other serious crimes. There is no longer a debate about their cryptocurrency’s legitimacy, but legislation surrounding it will be an evolving discussion in the country’s near future.
South Korea’s burgeoning economy has been a spectacle of the last couple of decades, and its stronger ties to cryptocurrency mean big things for the continuing swell.
France made headlines in 2019 by announcing that a pilot program would be launched to create a central bank digital currency in 2020, that could be traded from one financial institution to another. At the time, France was actually the biggest acceptor of Bitcoin transactions, with more than 25,000 different entities accepting it throughout the nation. Consequently, it was announced last year that crypto-to-crypto trades would not be taxable. At the beginning of 2020, cryptocurrency was, for the first time, recognized as a fungible asset by a lower French court. Analysts have touted that as a major foothold for cryptocurrency in a country where it already had a lot of momentum. The French economy is one of the biggest in Europe, and the simple fact that a French court recognized cryptocurrency officially will be impactful throughout the continent. As definitions, legislation, and technology advance, France will undoubtedly be one of the countries leading the charge.
President Xi Jinping has called for the acceleration of the republic’s adoption of crypto technologies. China’s legislative rulings have paved the way for a national digital currency, and China has made it know that it is their intention to adopt such a currency. The timetable is flexible, but the world watches as the described development would shake up the global economy in a massive way. China has passed various laws regarding cryptocurrency over the last several years, including its most recent one to protect “virtual assets” as an inheritance. That means that Bitcoins and other cryptocurrencies can be legally inherited, and the new law will go into effect at the beginning of 2021. Followers of cryptocurrency news know that the Chinese government has put up a lot of barriers for crypto exchanges. It’s a wide held belief, however, that leaders know the important role digital currency will play in both public and private transactions, and that they just want to take the proper precautions so that licensing and regulations give the government the level of control it currently feels comfortable with.
At the forefront in terms of developments with cryptocurrency, Japan adopted new regulations for cryptocurrency transactions. A couple of days prior, the nation had announced its establishment of two self-regulatory organizations for cryptocurrency — Japan STO Association and the Japan Virtual and Crypto Assets Exchange Association. An encouraging sign for the crypto sector in Japan is that the number of approved cryptocurrency exchanges has increased over the last six months. There are now 23 approved cryptocurrencies in Japan. One thing that has the nation’s crypto sector on edge is the hacks responsible for decimation to Bitpoint Japan over the last year. The regulatory organizations will continue attempting to establish more secure financial controls to prevent similar devastations.
Singapore was another among nations to introduce licensing for the crypto sector. Legislation there, following suit with other countries, is to require certain financial controls among cryptocurrencies. The press release for the new Payment Services Act stated that it would will “enhance the regulatory framework for payment services in Singapore, strengthen consumer protection and promote confidence in the use of e-payments.” There will be three classes of licenses in the country, for smaller businesses, standard payment institutions, and major payment institutions. Other than the three classes, the new bill tends to align with established regulations from the Financial Action Task Force, a global financial regulator.
Other nations face the same developments and impending legislation as cryptocurrency becomes more legitimate globally. While some signs and murmurings of regulation legislation make crypto traders a little queasy, even “bad” news shows positive signs for universal acceptance of cryptocurrency. Nations will continue to pass legislation and mimic each other’s attempts to keep an eye on what they are certain will be an ever-more impactful part of their economies. The future is bright, and things that were imagined 10 years ago are coming into fruition among the world’s biggest markets.