Crypto Regulations: Global Laws and Security Challenges in 2024

The growth of cryptocurrencies was at an unprecedented rate. The person who created the first blockchain or mined the first BTC would not have imagined such an enormous growth. Cryptocurrencies are poised to control the economics of the revolutionized world. With more countries amending their existing laws and increasing their crypto holding, the future of the crypto market seems to be bright in the years to come. 

While the values of cryptocurrencies are soaring high, this attracts the attention of scammers and hackers into this space. The digital nature of cryptocurrencies makes it an easy target for crypto scammers. This article discusses how the world is acclimatizing to decentralized finances and what the crypto market is doing to counter security issues. So, keep reading to get the latest insights about the crypto market and how macroeconomics reacts to this surge. 

US Regulations On Cryptocurrencies

Is it legal to trade cryptocurrencies in the US? Yes, it’s possible. However, the United States does not have a well-defined legal framework for crypto transactions. One could say that the US crypto laws are ambiguous as they change from state to state. Following the European Union’s footsteps, the lawmakers of the US are now open to the fact that cryptocurrencies could be the next big thing and that laws should be to regulate them. 

By 2024, the US has started introducing laws to regulate cryptocurrencies and reduce illicit affairs associated with them. The Financial Innovation and Technology (FIT) Bill, and Blockchain Regulatory Certainty Act has helped to define what a cryptocurrency is and whether it is a legal tender. This has helped increase the popularity of crypto assets and the increase in the reception of the crypto market. Commissions and organizations have been set up by the US government to regulate the crypto market. 

The Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Internal Revenue Service (IRS) are the various independent bodies set up by the government to monitor the crypto market. All these organizations have different interpretations and definitions of cryptocurrencies and crypto assets. While some consider cryptocurrencies as securities, others classify them as commodities similar to precious metals or oil. 

SEC introduced Cryptocurrency Exchange Traded Funds in 2021, which is a pool of different cryptocurrencies and crypto assets, which are available to be traded in the stock market. This has helped bridge the gap that existed between normal stock traders and crypto traders. It has opened a new way for investors to buy into the crypto market without knowing much about it. 

Crypto Regulations Across The Globe

The United States is not the only country in the world that recognizes cryptocurrencies as securities or commodities. The European Union was the first to amend its financial laws to allow crypto assets a space in their financial market. It is estimated that there are over 50 million crypto traders in the world. So, take a look at how cryptocurrencies fare across the world. 

United Kingdom

The United Kingdom left the European Union (EU) in 2020. However, the UK still has several ties with the EU. In 2023, the EU approved the Markets in Crypto-Assets (MiCA) Regulation, making a straightforward and unified method for all crypto transactions. This indicates that the lawmakers of the UK are willing to accept the potential of crypto assets. 

In the UK, the Financial Conduct Authority (FCA) monitors and regulates crypto companies and exchanges to prevent money laundering and financing terrorism. The Property (Digital Assets) Bill introduced in the British Parliament could potentially allow cryptocurrencies, NFTs (Non-Fungible Tokens), and any other crypto asset to be considered personal property. 

Canada

Canada is a strep ahead compared with their southern neighbor, the United States. Laws in Canada allow crypto transactions to be taxed. Like the US, Canada also allows crypto exchange-traded funds to be introduced into their stock market. 

However, cryptocurrencies are still not considered legal tender in Canada. The Proceeds of Crime and Terrorist Financing Act (PCA) defines ‘a person dealing in cryptocurrencies’ as a money service business. This led to more doubts among Canadian citizens. 

China 

China has very stringent laws and regulations regarding cryptocurrencies. The People’s Bank of China (PBOC) has banned all cryptocurrencies, crypto transactions, and crypto exchanges from operating in the Chinese mainland. 

Crypto mining is also considered illegal in China and could attract huge punishments if caught. This has caused crypto enthusiasts to move out of the Chinese jurisdiction and to places where there is no ban on crypto trading. 

El Salvador

El Salvador is the only country in the world that has made cryptocurrency its legal tender. On 7 September 2021, the lawmakers of El Salvador decided to make Bitcoin its legal tender apart from the existing US Dollars. 

The laws and limitations imposed on the US Dollars are now also applicable to Bitcoin. However, the country is currently developing separate laws and regulations for Bitcoin and crypto assets. 

Japan

Japan is one of the first Asian countries to recognize the potential of cryptocurrencies and consider them as legal property. However, the Payment Services Act (PSA) and the Financial Services Agency (FSA) require crypto exchanges to comply with the laws of the country to facilitate crypto transactions. 

In 2020, the Japanese Virtual Currency Exchange (JVCE) was established with all the crypto exchanges operating within Japan to be its members. All the revenue generated from crypto exchanges is now considered as miscellaneous income and taxed accordingly. 

Australia

Australia recognizes cryptocurrencies as legal property and taxes the profits according to the capital gains tax. The jurisdiction also allows crypto exchanges to operate within Australia. 

The ICOs (Initial Coin Offerings) and crypto transactions are now regulated by the Australian Securities and Investments Commission (ASIC). The country is developing a legal framework to include all types of crypto assets. 

Brazil

While cryptocurrencies are not yet considered legal tender in Brazil, the country has passed laws that allow its residents to use cryptocurrencies to make transactions. This was made possible after the Chamber of Deputies approved the legal framework for cryptocurrencies. 

In 2023, the Legal Framework for Virtual Assets bill bestowed crypto-regulating power to the Brazilian Central Bank, allowing it to monitor and authorize the operations of crypto exchanges. The country is currently developing a legal framework to allow its residents to make crypto transactions. 

Singapore

Singapore does not consider cryptocurrencies as legal tender, it is, however, classified as personal property and not as securities. The crypto exchanges, transactions, and activities are regulated by the Monetary Authority of Singapore (MAS). 

Stablecoins were the first cryptocurrencies to be legally available to be traded in Singapore. Currently, MAS regulates all types of crypto transactions and holdings. Singapore does not tax long-term capital gains from crypto investments, making it an ideal place for crypto traders. 

India

The Indian economy was skeptical about introducing cryptocurrencies and crypto assets to the market. Initially, there was a ban on cryptocurrencies which was then removed by the Supreme Court of India. 

The Cryptocurrency and Regulation of Official Digital Currency Bill is expected to be passed by the Indian Parliament in the years to come. It is also expected that the Reserve Bank of India will create an official virtual currency. 

Currently, there is a 30% tax levied on all crypto investments. The income from cryptocurrencies and crypto assets is also levied a 1% tax deduction at source (TDS). 

Bhutan

Bhutan was also hesitant to include cryptocurrencies in its economy. The Royal Monetary Authority (RMA) of Bhutan advised against regulating crypto assets. However, they changed their stance in 2019 by introducing the Regulatory Sandbox Framework for Mining Cryptocurrency. 

By 2021, Bhutan expanded its crypto laws other than incorporating Bitcoin mining. Later, the Bhutan government spent millions in crypto holding, 50% of which was used to fund salary increases and government projects. 

What Is Cryptocurrency Security?

Cryptocurrencies are digital assets that require the internet to function and transact. Even though cryptocurrencies use the latest security protocols, advanced cryptography, and an immutable blockchain environment, it is still highly susceptible to hacking and scamming. 

It is estimated that till 2024, $1.3 billion worth of cryptocurrencies have been stolen from crypto investors and traders. Today, the cyber security industry offers the utmost security to crypto investments, but hackers are evolving according to the changes by incorporating newer methods to scam unsuspected crypto investors. 

Security Issues With Cryptocurrencies

Given below are a few of the most popular security issues with cryptocurrencies: 

Fake ICO (Initial Coin Offerings)

ICOs Initial Coin Offerings) are methods to advertise and gain attention for newer crypto projects. It is a type of crowdfunding for crypto projects. However, recently scammers started launching fake ICOs by offering fake tokens for investments. 

Pump and Dump Schemes

In the pump-and-dump scheme, fraudsters manipulate the crypto market by creating unnecessary hype for a specific cryptocurrency. This prompts crypto investors to buy the trend only for the fraudsters to sell it when the prices reach an all-time high. 

Ponzi Schemes

Scammers create Ponzi schemes, where they ensure high returns on the investments. In a Ponzi scheme, investments from the new investors pay the old investors and as the number of new investors dries out, the scheme collapses. 

Giveaway Scams

Fraudsters and criminals impersonate influential people on social media and advertise to provide cryptocurrencies for free. The users are prompted to send them a fee to cover the transaction cost or to verify their identity to receive freebies. 

Malware and Ransomware Attacks

Crypto hackers use malicious software to gain access to a user’s system and their crypto wallet to steal the crypto assets stored in it. They might also steal personal information and demand a ransom to not release it to the public. 

Phishing

Scammers create professional-level websites that are fake to trick users into giving their personal information. Scammers use it to steal private keys, providing them direct access to the user’s crypto investments. 

Conclusion

Cryptocurrencies have certainly influenced world economics in an unprecedented way. It is generally regarded as the currency of the future. Even though it is created using the latest technology, it poses several security issues. As cryptocurrencies are unregulated, there is a certain degree to which government agencies can indulge in regulating them. 

However, the scenario has changed a lot in recent years as more countries are willing to regulate cryptocurrencies and create legal frameworks to incorporate them into their economy. Cryptocurrencies are highly volatile and carry certain risks. Also, make sure that your jurisdiction has the legal framework to support crypto transactions or has not imposed any ban on it before investing.