This year has been a little rocky in terms of global regulation of the crypto industry. For example, China has clamped down heavily, while India and Russia look set to follow. Meanwhile, the U.S. has continued to drag its feet. In this roundup, we will explore the current regulatory landscape and look to some predictions for 2022.
Ethereum solutions provider, ConsenSys, has developed a Q3- report about the regulations on the crypto ecosystem. With a heavy focus on the U.S., the company stated that there had been a “regulatory turf war” between the CTFC (Commodity Futures Trading Commission) and the SEC (Securities and Exchange Commission).
SEC Chairman, Gary Gensler, stated that the crypto industry could only exist within a public policy framework and not outside of one.
Recapping Crypto Regulations
Gensler thinks that not all crypto-assets are secure. However, companies hosting and trading them may be subject to securities laws for some tokens. Therefore, these would need to register with the SEC, which has been highly lethargic in approving crypto-related products this year.
One milestone it has made is the approval of the first Bitcoin futures exchange-traded fund in October of this year. Analysts are confident that Ethereum ETFs are very close to being a reality in 2022. However, they are doubtful about any ETFs that invest directly in digital assets. The SEC currently does not support these funds in the U.S. though plenty of them are trading in Canada.
Controversial Infrastructure Bill
Furthermore, one of the more controversial regulatory actions was passing the Infrastructure bill in mid-November. The bill was a big issue because it contained broad terminology for crypto companies. “broker” included software firms, wallet providers, validators, and miners. These would be eligible for tax and transaction reporting. Crypto advocates and several senators have been lobbying to change the wording of this all-encompassing legislation.
A bipartisan group of U.S. senators want Treasury Secretary Janet Yellen to define a "broker" for tax reporting purposes after the passage of an infrastructure bill that drew the crypto industry's ire this summer.@nikhileshde reportshttps://t.co/QWAcKl8MXL
— CoinDesk (@CoinDesk) December 14, 2021
Also, central banks worldwide continued to express their disapproval of decentralized digital assets. Russia and India are still in the process of clamping down further on crypto trading, and the U.K. is not far behind.
Predictions About Regulations of the Crypto Ecosystem into 2022
ConsenSys expects the regulatory trends to continue into 2022, saying: “2021 has already proved to be the most pivotal year in DeFi and crypto regulatory news yet, and we anticipate that trend to continue.” However, it remains to be seen whether they will crack down heavily on the industry.
On the other hand, Coinbase CEO Alesia Haas said that the crypto industry needs tailored rules and regulations. On December 8, she told Congress: “Without special legislative solutions that are openly debated with public participation, the United States risks unnecessarily onerous and chilling laws and regulations.”
— Reuters (@Reuters) December 8, 2021
Furthermore, stablecoins are also a significant thorn for regulators, and leading stablecoin issuers will publish full audits about it.
Central banks will likely continue to pressure the crypto industry to roll out their own central bank digital currencies (CBDCs). Therefore, it is up to forward-looking policymakers to establish frameworks that foster innovation while maintaining those consumer protections that they seem so concerned about.
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