In 2021, policymakers around the world raised concerns that crypto assets were too big to be left unregulated and regulation was needed to offer more security to investors and consumers. Most of the major economies promised new rules for 2022, and lawmakers are delivering. After a productive first half of 2022 with many initiatives and a few rules already in the final stages, the second half of the year also looks promising.
The U.S. may have taken a slower path than other countries when it comes to crypto legislation, as it doesn’t have any rules yet at the federal level, but this could change in the next few months.
When President Joe Biden signed an executive order in March, requesting federal agencies to give the government input to build a crypto regulatory framework, it established a 180-day deadline. A bit shorter for some agencies. This deadline ends in September, so in the next few months, several federal agencies will need to submit their views on how to design a regulatory framework that supports the crypto asset sector. This will probably be the first step for any possible government regulation.
On Capitol Hill, Senators Kirsten Gillibrand and Cynthia Lummis introduced the first major bipartisan legislation aimed at regulating the crypto market on June 7. But this is not the only one. In April, Sen. Pat Toomey introduced legislation to make a new regulatory framework for stablecoins. Senators Gillibrand and Lummis warned Tuesday (July 19) that their bill will most likely be deferred to 2023 to give more time for senators to understand and digest the proposal. However, the pair also noted that specific areas like the role of the Commodity Futures Trading Commission (CFTC) to supervise crypto assets and specific provisions to regulate stablecoins could be rolled into another bill and voted on this year.
The Securities and Exchange Commission (SEC) is also under increasing pressure to propose rulemaking that would clarify when crypto asset providers need to register with the SEC and comply with some additional disclosure requirements.
Last, the Federal Reserve continues working on a digital U.S. dollar. After a first white paper published in January, the Fed hasn’t publicly stated its position in this debate. However, recent public interventions by board members showed a very positive attitude toward a central bank digital currency (CBDC).
The EU has made significant progress in crypto regulation in 2022. On June 30, the EU institutions agreed on the proposed legislation that will regulate crypto asset providers in Europe, the Markets in Crypto-Assets (MiCA) regulation. In the next few months, the European Parliament and member states will need to approve and ratify the law, which may still be subject to minor changes, and start with its implementation.
It is during the implementation phase where more legislation may be needed. The two EU regulators involved, the European Securities Market Authority (ESMA) and the European Banking Authority (EBA) will need to adopt new competences to regulate the crypto asset market, including the authorization to issue stablecoins.
On the digital euro, the European Central Bank is very active. The central bank is planning to run a pilot test later in the year with merchants and consumers to assess the needs of a CBDC and how to design a digital currency that pleases everyone. In parallel, the European Commission launched a public consultation about a CBDC in April. While the feedback from citizens wasn’t very positive, this was a necessary first step if the EU is ever to propose legislation to adopt a new digital currency. Potential legislation on this space could come in 2023.
The U.K. announced in March that it would present new crypto rules in 2022. The first law on stablecoins was expected before the summer recess, but the governor of the Bank of England said in an event that there were some delays, possibly due to recent resignations in key positions in the Prime Minister’s cabinet. Nonetheless, stablecoin regulation could be proposed right after the summer break.
The U.K. parliament also launched an inquiry into the role of cryptocurrencies last week, on July 13, raising the chances of proposing new legislation during this parliamentary session that runs from May to April.
In the meantime, the U.K. government has been pushing for a crypto sandbox that would allow crypto providers to test new products in a safe regulatory environment. According to the government’s schedule, the sandbox should be available next year.
Much earlier, probably during the summer or soon after, the Financial Conduct Authority may propose new rules for crypto advertising and promotion.
On the digital pound, the Bank of England and lawmakers, unlike their EU peers, don’t seem to be in a rush to decide whether the U.K. needs a retail CBDC. In January, lawmakers published an opinion highlighting more the risks that the potential benefits of a digital pound. And the BoE has only made timid progress, at least publicly, on the design of a CBDC, suggesting that regulation in this space is not imminent.
Learn more: UK Parliament Launches Inquiry Into Crypto
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