2024 Global Cryptocurrency Regulatory Highlights: The US Approves Spot ETFs, Europe’s MiCA Takes Effect, Global Regulatory Friendliness Upgrades

Author: Weilin, PANews

The year 2024 is a special and critical year for global blockchain regulation, with the regulatory framework for the cryptocurrency industry being initially improved and crypto assets integrating into the mainstream financial system.

The approval of Bitcoin and Ethereum ETFs in the United States has propelled the cryptocurrency industry towards mainstream acceptance. At the same time, the new U.S. government led by Trump is about to take office, with the new Securities and Exchange Commission (SEC) Chairman Paul Atkins set to take over, indicating that U.S. regulators may adopt a "disclosure-based regulation" approach in the future, in contrast to the previous SEC's "enforcement-based regulation." The establishment of a White House Chief of Artificial Intelligence and Cryptocurrency Affairs also suggests a more friendly, flexible, and innovative regulatory policy for cryptocurrencies.

In Europe, the regulatory framework for stablecoins, the Markets in Crypto-Assets Regulation (MiCA), has officially come into full effect, accelerating competition among crypto companies in the stablecoin space. In the Asia-Pacific region, Hong Kong approved Bitcoin and Ethereum spot ETFs in April, and four new members joined the virtual asset exchanges. In terms of stablecoins, Hong Kong launched a stablecoin sandbox and stablecoin legislation.

In other parts of Asia, such as Vietnam, the government has released the National Blockchain Development Strategy. In Russia, regulations on cryptocurrency mining have come into effect. Additionally, in the Middle East and North Africa, as well as in the Americas, the UAE, Qatar, and Argentina have also shown positive policy innovations in cryptocurrency regulation.

As the year comes to a close, PANews reviews the significant regulatory progress in the global crypto market. Under different regulatory systems around the world, the crypto market is expected to present a distinctly different landscape next year.

United States: Approval of BTC and ETH Spot ETFs and Regulatory Expectations of the New Government

On January 10, 2024, the U.S. Securities and Exchange Commission (SEC) approved the spot Bitcoin exchange-traded fund (ETF), and then on May 23, it "180 degrees" reversed its decision to approve the Ethereum ETF. On July 23, the U.S. Ethereum spot ETF officially began trading. These two events mark an important milestone in the U.S. crypto investment landscape. The Bitcoin ETF and Ethereum ETF provide a scalable bridge between traditional finance and cryptocurrencies, becoming key integration points.

According to SoSoValue data, as of December 23, the total net asset value of the U.S. Bitcoin spot ETF was $105.08 billion, accounting for 5.7% of Bitcoin's market capitalization. The total net asset value of the U.S. Ethereum spot ETF was $12.05 billion, accounting for 2.94% of Ethereum's market capitalization. The successful launch of these two ETFs has made it possible for more altcoin ETFs, such as Solana, Doge, and XRP ETFs, to be applied for, further promoting the maturation of the crypto asset market.

Two important bills regarding U.S. crypto regulation are also noteworthy this year. On May 22, 2024, the U.S. House of Representatives approved the Financial Innovation and Technology Act of the 21st Century (FIT21), which aims to clearly define cryptocurrencies, classify specific cryptocurrencies to determine whether they are securities or commodities, and decide which government agency (SEC or Commodity Futures Trading Commission CFTC) will regulate them, and it is still in progress.

Regarding another regulation, SAB 121, on June 1, President Biden vetoed the bill aimed at overturning accounting standards set for companies holding cryptocurrencies. This may change with the new government taking office in the new year and facilitate the adoption of cryptocurrencies by more large companies.

After the U.S. elections, the new government led by Trump is expected to initiate a new regulatory model for cryptocurrencies. Trump, who supports cryptocurrencies, has appointed several pro-crypto politicians to important positions in his new government. For example, on December 5, Trump officially nominated Paul Atkins as SEC Chairman. On December 6, Trump announced the appointment of David Sacks as the White House Chief of Artificial Intelligence and Cryptocurrency Affairs, marking the first time this position has been established. On December 23, 29-year-old political newcomer Bo Hines was appointed as the Executive Director of Trump's Crypto Committee. On December 13, French Hill was elected Chairman of the House Financial Services Committee. This series of appointments suggests that the U.S. may adopt more friendly policies in the field of crypto regulation in the future.

Europe: The Effectiveness of the MiCA Bill and Intensified Stablecoin Competition

The EU's Markets in Crypto-Assets Regulation (MiCA) has implemented regulatory rules for stablecoin issuers, which came into effect on June 30 and was fully implemented on December 30. MiCA is the first complete regulatory framework by the EU for the crypto industry, particularly providing clear requirements for stablecoin regulation. Although some crypto companies have stated that they are not fully prepared, under the increasingly strict compliance requirements, competition in the European stablecoin market is bound to intensify. For instance, the unlicensed Tether has invested in the Dutch company Quantoz and the European stablecoin provider StablR.

Additionally, the UK's Financial Conduct Authority (FCA) has also expressed its desire to launch a comprehensive regulatory system for cryptocurrencies by 2026. A study commissioned by the FCA shows that the holding of crypto assets has increased by 4% over the past two years, with approximately 7 million adults holding crypto assets among the country's roughly 68 million population.

On December 21, the German parliament passed the Financial Market Digitalization Act, which is necessary for the full implementation of MiCA.

Hong Kong: Four New VATP Licensees to Promote Stablecoin Development

On October 31, 2022, Hong Kong officially released its virtual asset policy declaration, and to date, nearly 1,000 Web3 companies have emerged in Hong Kong.

At the end of April this year, Hong Kong licensed six virtual currency ETFs under Huaxia Hong Kong, Bosera International, and Harvest International. Despite facing fierce competition from similar overseas products and needing to improve trading volume, they signify Hong Kong's key position in the global crypto regulatory system.

On July 18, the Hong Kong Monetary Authority announced the first batch of three "sandbox" participating institutions, including JD Coin Chain Technology, Yuan Coin Innovation Technology, and the jointly applied Standard Chartered Bank (Hong Kong) Animoca Brands Limited and HKT. These three institutions can test their expected business models within a designated scope and communicate with the Monetary Authority on how to comply with the proposed stablecoin regulatory system in the future. Hong Kong's Virtual Asset Trading Platform (VATP) system further promotes the compliant development of crypto asset service providers. On December 18, after OSL Exchange, HashKey Exchange, and HKVAX, Hong Kong's VATP welcomed four new members, including Cloud Account Greater Bay Area Technology (Hong Kong), DFX Labs, Hong Kong Digital Asset Trading Group, and Thousand Whales Technology.

On December 6, the Hong Kong government announced the long-awaited stablecoin bill, laying the foundation for comprehensive regulation of fiat-backed stablecoins (FRS). In the future, under a legally compliant regulatory framework, Hong Kong is likely to issue a stablecoin that can be widely used in investment, trade, payment, and other scenarios.

Other Asia-Pacific Regions: Further Advancement of Web3 Policies and Sandbox Regulations

On November 27, Japan's new Digital Minister Masaaki Taira announced at a forum that Prime Minister Kishida Shigeru has restructured his party's Web3 and crypto policy-making department, further promoting policy innovation in the field of crypto and blockchain in the country. The government has stated that it does not intend to hinder the "promotion" of Web3-related businesses. This project group is a creation of former Prime Minister Kishida, who resigned from his position earlier this year. Kishida has indicated that he also supports policies that favor Web3. The Liberal Democratic Party (LDP) of Japan is pushing for cryptocurrency tax reform. Proposed reforms include applying a separate tax rate of 20% on profits from cryptocurrency trading and introducing a loss carryforward system. Currently, profits from cryptocurrencies in Japan are classified as miscellaneous income, with a maximum tax rate of up to 55%.

In South Korea, on July 19, the country introduced the Virtual Asset User Protection Act, aimed at enhancing investor protection and ensuring the future development of the market. However, shortly after the new regulations were implemented, political turmoil arose in South Korea, and after martial law and plans to impeach the current president, the National Assembly decided to suspend all regulatory discussions related to cryptocurrencies.

Meanwhile, countries such as Indonesia, Thailand, and Vietnam are also strengthening their regulation of the crypto market, particularly by launching sandbox frameworks that allow innovative projects to experiment in a more relaxed regulatory environment. Specifically, Indonesia's Financial Services Authority (OJK) launched a sandbox framework in June 2024. In August 2024, the Thai SEC introduced a digital asset sandbox to complement its existing detailed licensing framework, allowing testing of key initiatives aligned with emerging market trends. The Vietnamese government announced the National Blockchain Development Strategy on October 22, aiming to make Vietnam a regional leader in blockchain technology research, application, and innovation by 2030.

India's unfriendly regulatory policies towards the crypto market are also showing signs of easing. In January this year, exchanges like Binance and Kraken were requested to be blocked by India's financial intelligence agency for failing to comply with India's anti-money laundering rules, resulting in their removal from the Indian Apple App Store. However, in May this year, Binance and KuCoin became the first offshore crypto-related entities approved by India's Financial Intelligence Unit (FIU), contingent upon paying fines after hearings with the FIU.

Russia: Effectiveness of Cryptocurrency Mining Regulations and Digital Currency Tax Adjustments

Russia's comprehensive cryptocurrency mining regulations came into effect on November 1, 2024, establishing strict energy limits, mandatory registration, and regulatory requirements, providing a clearer legal framework for the industry. The new regulations officially incorporate cryptocurrency mining as a legal activity and set safety and operational standards for miners, while requiring digital financial asset transactions to occur on specific platforms. The regulations aim to balance the growth of Russia's crypto industry, energy demands, and control over illegal mining.

According to the new regulations, only registered enterprises and individual entrepreneurs can legally engage in cryptocurrency mining activities, while unregistered individual miners are limited to a monthly electricity consumption of 6,000 kWh; those exceeding this limit must register as entrepreneurs to continue mining. Additionally, on November 29, Putin signed a new digital currency tax law that explicitly classifies digital currencies as property, exempting them from value-added tax and providing tax exemptions for cross-border settlements. Nevertheless, mining service providers are still required to report user information to tax authorities, and those who fail to report on time will face fines.

On December 4, Putin stated at the Russia Calling investment forum that it is impossible to prohibit the development of digital payment tools like Bitcoin, emphasizing that the future of these new technologies will continue to advance.

Middle East and North Africa: Rapid Growth of the Cryptocurrency Market

In the Middle East and North Africa, the UAE's cryptocurrency ecosystem is growing rapidly, thanks to regulatory innovation, institutional interest, and the expansion of market activities. The Dubai Virtual Assets Regulatory Authority (VARA), established in 2022, provides a globally leading regulatory framework for the crypto industry and promotes its further development. Currently, 23 platforms have obtained VARA licenses, with 13 new licenses issued this year, including Binance, Bybit, OKX, and Derbit.

Saudi Arabia remains the fastest-growing country in the Middle East and North Africa's cryptocurrency economy. According to a report by Chainalysis, the total on-chain value has increased by 154% compared to last year. This rapid growth is attributed to the country's ongoing developments in blockchain innovation, central bank digital currencies (CBDCs), the gaming industry, and fintech.

Following closely is Qatar, which has become the second fastest-growing cryptocurrency market in the region in terms of on-chain value. The Qatari government previously banned the trading of crypto assets, but its regulatory policies are continuously improving. The Qatar Financial Centre (QFC) launched a brand new digital asset regulatory framework in September this year, covering five aspects: definitions of digital assets, market access and compliance requirements, technical standards and security guarantees, consumer protection and education, and international cooperation and standardization, laying the legal and regulatory foundation for the development of digital assets.

South Africa: The Most Friendly Attitude Towards Cryptocurrency in Africa, with 248 Licenses Issued

Among African countries, South Africa is one of the most friendly towards cryptocurrencies. The South African Reserve Bank (SARB) has not explicitly prohibited the use of cryptocurrencies.

As of December 16, 2024, the South African Financial Sector Conduct Authority (FSCA) has issued 248 licenses out of 420 applications received for cryptocurrency asset service providers (CASPs). According to a local report, 56 applications are still under review, while 9 applications have been rejected. Additionally, the report indicates that after the FSCA raised questions about the business models of some companies, 106 institutions withdrew their applications.

Americas: National Policy Innovations for Cryptocurrencies

In the Americas, Argentina is vigorously promoting the adoption of cryptocurrencies. On October 22, the Argentine Securities Commission (CNV) announced a public consultation on a draft aimed at regulating the operations of virtual asset service providers (VASPs) in the country and imposing new compliance requirements on these institutions. At the same time, the Argentine securities regulator announced the allowance of foreign investment products related to various crypto ETF opportunities to enter the market. President Milei plans to implement a policy of free currency circulation in 2025, allowing Argentinians to choose any currency, including Bitcoin, for transactions, providing new opportunities for economic diversification.

Brazil has established friendly regulations with significant potential to develop RWA (Real World Assets), creating a diverse and vibrant community, and is piloting a CBDC (called DREX).

In El Salvador, Bitcoin is legal tender, and the government encourages its adoption and promotes cryptocurrency tourism. On December 11, El Salvador signed an agreement with Argentine regulators to support the development of the crypto industry in both countries.

Conclusion:

Overall, 2024 is undoubtedly a key year for compliance in the global cryptocurrency and blockchain industry. Despite the evolving regulatory framework, crypto companies and practitioners still face certain uncertainties and challenges, but the overall situation is improving, and cryptocurrencies are moving towards integration into the mainstream financial system and broader adoption. Looking ahead to 2025, how to balance regulation and innovation, as well as strengthen coordination and communication between the industry and regulators, will be crucial for the future development of the crypto industry.