MiCA & TFR: the two new pillars of the EU crypto-assets regulatory framework

Prior to MiCA, https://www.xcritical.com/ there was only one statutory definition of the term “virtual currency” for AML purposes. There may be a lack of understanding among users on what permissions (including the power of transfer) are granted to smart contracts. The immutability of the blockchain itself is another risk, such as with the transfer of illicitly obtained funds through scams. For an ICO not to be considered as a security token offering, tokens will need to be in another category, such as a utility or in governance token (there is no definition of either under Singapore law); they lack rights similar to those of a capital markets product. However, the MAS has a broad understanding that a utility token gives rights to goods and services, which could include computation time on a blockchain.

Establishing Cryptocurrency Regulation Rules

The bearer of the privity token would have privity (a contractual relationship, including the right to judicial enforcement, as well as any other assignable rights provided to the creditor in the contract itself) against the debtor, while the privity between the original parties is eliminated. The object of a privity blockchain payments token–pertinent contractual rights–would be defined in the underlying contract and should be specific, defined in time and space, but freely assignable. The object (subject matter) of cession, license, or novation is effectively unlimited, since they are based on the basic principles of personal autonomy, freedom of contract, and laissez-faire of private law. Regulatory limitations are imposed only on account of the rights of others and limits on the exercise of free will.

The Payments Newsletter including Digital Assets & Blockchain, February 2024

Issuers of e-money tokens should be authorised either as an electronic money institution or as a credit institution. And issuers should, in principle, comply with the relevant requirements set out in that Directive on issuance and redeemability of e-money tokens. This document describes how the two distinct sets of recommendations build a framework for the regulation, supervision and oversight of global stablecoins arrangements and other crypto-asset activities. This first phase began when MiCA was approved by the European Parliament on April 20, 2023, marking the ‘birthday’ of the Financial cryptography regulatory framework. MiCA was then signed into law on May 31, 2023, and published in the Official Journal of the European Union (OJEU) on June 9, 2023.

Blockchain & Cryptocurrency Laws and Regulations 2025 – Australia

In June 2021, China banned all domestic cryptocurrency mining, and followed-up by outlawing cryptocurrencies outright in September 2021. The new regulation effectively banned the use of all cryptocurrency exchanges (foreign and domestic) and prompted a major token sell-off. Although domestic cryptocurrency exchanges are under a blanket ban in China, workarounds are possible using certain foreign platforms and websites that China’s internet firewall doesn’t catch. Factors driving the growth of the market include the wider availability of high-speed internet which allow accessibility and real-time data analytics to offer a better range of financial services products. The findings noted that security and privacy concerns risk restraining the development of the market.

• If the parties do not intend to assign the rights completely, a license (permission to use) might be an option.
• Although cryptocurrency may be a CGT asset, a capital gain arising on its disposal may be disregarded if the cryptocurrency is a “personal use asset” and it was acquired for A$10,000 or less.
• MiCA regulation will allow regional Web3 businesses to operate in the EU market without needing to attain a license from each EU country.
• While it is difficult to find a consistent legal approach at the state level, the US continues to progress in developing federal cryptocurrency legislation.
• Canada classifies all crypto investment firms as money service businesses (MSBs) and requires that they register with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).
• Meanwhile, crypto exchanges in the country must register with the Financial Services Agency (FSA) and comply with AML/CFT obligations.

Finally, asset-referenced tokens and e-money tokens will be subject to more stringent requirements if they are deemed as “significant”. This will be the case when they meet, or are likely to meet, certain criteria, including a large customer base, a high market capitalisation, or a large number of transactions. In particular, issuers of significant asset-referenced tokens should be subject to higher capital requirements, to interoperability requirements and they should establish a liquidity management policy. Issuers of e-money tokens should also draw up a crypto-asset white paper and notify it to their competent authority. The crypto-asset white paper should expressly refer to the right of holders of e-money tokens to redeem their e-money tokens for funds denominated in the official currency that the e-money tokens reference at par value and at any time. MiCA lays down rules for offerors and people seeking admission to trading of Crypto-assets , and for issuers of asset-referenced tokens and e-money tokens.

CBDC, the Treasury will lead an interagency working group to consider the potential implications of a U.S. The leadership of the Federal Reserve, the National Economic Council, the National Security Council, the Office of Science and Technology Policy, and the Treasury Department will meet regularly to discuss the working group’s progress and share updates on and share updates on CDBC and other payments innovations. Digital assets and the mainstream financial system are becoming increasingly intertwined, creating channels for turmoil to have spillover effects. Stablecoins, in particular, could create disruptive runs if not paired with appropriate regulation. The potential for instability was illustrated in May 2022 by the crash of the so-called stablecoin TerraUSD and the subsequent wave of insolvencies that erased nearly $600 billion in wealth. In October, the Financial Stability Oversight Council (FSOC) will publish a report discussing digital assets’ financial-stability risks, identifying related regulatory gaps, and making additional recommendations to foster financial stability.

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They may be applicable and potentially very useful for the blockchain enabled virtual economy as illustrated by the examples provided further in this section. Importance of private law in supplementing public law frameworks in regulating blockchain technology is also supported by legal research55. The workings of a society cannot be easily simplified into frameworks based on just a few modalities. Furthermore, it would be unwise to invent new frameworks when we already have well-established systems developed over millennia, such as the public law and private law legal rights framework. Therefore, it is useful to consider these existing frameworks as the starting point for any attempt at legal regulation of rights, obligations and assets in a new technological milieu.

A security token offering will be regulated under the SFA and prospectus requirements will apply unless an exemption is available. The MAS is also expected to introduce consumer safeguard measures to prevent retail customers from using local credit cards to buy cryptocurrencies and offers of incentives such as free tokens to court retail users. E-money is defined under the PSA as any electronically stored monetary value that is denominated in or pegged by its issuer to any currency, has been paid in advance to enable payment transactions via a payment account, is accepted by a person other than its issuer, and represents a claim on its issuer. Among the 60 countries we studied, cryptocurrency is legal in 33, partially banned in 17, and generally banned in 10.

Thus, the existing private legal rights, obligations and assets legal regime should carry over to the new medium of owning and transacting in them. This approach would allow the established and flexible private law legal framework to carry over into the blockchain world. The DLT Regulation primarily extends existing EU securities law to financial instruments in DLT form, while proposing some special rules for market infrastructures based on distributed ledger technology, which are not a substantive departure from existing rules applicable to regular financial instruments.

It has also announced investor protection measures that require licensed digital-payment token services providers, including cryptocurrency exchanges, to safeguard user assets. Potential new applications and protocols are being explored, including tokenisation of real-world assets and security tokens, central bank digital currencies and stablecoin issuance under a licensed framework with asset protection measures. Industries include digital asset exchanges, including ADDX and DBS Digital, exchange game finance, such as Ethlas, and digital asset financial institutions like Sygnum.

The statute lays out a series of specific requirements for disclosure, operation, and oversight during the two-year testing period. SB 164 “clarif[ies] that certain virtual currencies are intangible personal property for the purposes of taxation.” AB 15 includes virtual currency in the definition of a monetary instrument for the purpose of crimes related to certain financial transactions. SB 44 includes virtual currency in the definition of property under the Revised Uniform Unclaimed Property Act. On August 1, 2017, the Monetary Authority of Singapore issued “Clarifies the Regulatory Position of Digital Tokens in Singapore”. It defines a digital token as a cryptographically-secured representation of token-holders rights to receive a benefit or to perform specified functions, while a virtual currency is a particular type of digital token, which typically functions as a medium of exchange, a unit of account, or a store of value. The issuance of payment tokens needs to comply with the relevant provisions of the Payment Services Act (Tan 2021).

Regulatory differentiation of blockchain technology into public law and private law domains is essential and shall be based on the intended purposes and the scope of risks, rather than on desirability or undesirability for permission based regulation. Overall, despite calls to enact formal regulations from as early as 2017, as well as regulatory action by government agencies and some US states, as of 2023, formal US federal rules for blockchain technology are still absent. All of the current efforts mainly attempt to expand US federal securities law with respect to new actors of the blockchain economy. Providers with parent companies in high-risk countries for anti-money laundering or non-cooperative jurisdictions for tax purposes must implement enhanced checks aligned with the EU AML framework.

Some of the popular platforms and projects for NFTs include OpenSea, CryptoPunks, Axie Infinity and NBA Top Shot. In 2020, in coordination with crypto exchanges, Colombia introduced a sandbox test environment for cryptocurrencies in order to help firms try out their business models in respect of draft legislation. Brazil’s Securities Commission and its Central Bank have also introduced a regulatory sandbox while, in 2021, the Brazilian congress discussed draft legislation to impose new record-keeping regulations on cryptocurrency exchanges. Those countries with harsher regulations include Bolivia which has comprehensively banned cryptocurrencies and exchanges, and Ecuador which has issued a ban on the circulation of all cryptocurrencies apart from the government-issued SDE token (in operation from 2014 to 2018).

On 4 July 2024, the EBA published guidelines on information requirements in relation to transfers of funds and certain cryptoassets transfers under the Wire and Cryptoasset Transfer Regulation (WCTR). On 3 July 2024, the Basel Committee on Banking Supervision (BCBS) announced that it has approved a disclosure framework for banks’ cryptoasset exposures and agreed to make targeted amendments to its cryptoasset standard. The development following a meeting held by the BCBS during which a range of policy and supervisory initiatives were discussed. On 9 July 2024, the Monetary Authority of Singapore (MAS) and the Association of Banks in Singapore (ABS) announced that major retail banks in Singapore will progressively phase out the use of One-Time Passwords (OTPs) for bank account login by customers who are digital token users within the next three months.