What Crypto Regulations Are There in 2022?
The cryptocurrency industry is slowly becoming more regulated. Governments around the world are continually evaluating how they define cryptocurrencies and the various legal, taxable, and usage situations in their regions.
In this article, we analyze the different crypto regulations in 2022 from some progressive nations, including the U.S., Australia, Japan, El Salvador, and Vietnam. A special focus is given to emerging markets and their adoption or lack thereof of cryptocurrencies. El Salvador's government's acceptance of Bitcoin as legal tender was deemed risky and not widely accepted by its people. In contrast, Vietnam was dubbed first place in global crypto adoption by Chainalysis, but crypto has no legal recognition by the government. Understanding the trends and regulations of cryptocurrencies is critical for understanding their information environments. This article also focuses on the potential pitfalls of fraudulent crypto schemes and what governments are doing to counter them.
The United States
No federal regulation for crypto. Regulations vary state-by-state.
Although cryptocurrencies are not considered legal tender in the US, the Internal Revenue Service (IRS) defines cryptocurrencies as virtual currency. Virtual currency, according to the IRS, is a “digital representation of value that functions as a medium of exchange, a unit of account, and/or a store of value.” As such, cryptocurrencies can and are often taxable.
Currently, the U.S. is one of the world's leaders in mining, exchanging, and using cryptocurrencies. Because of their rising popularity, cryptocurrencies have come under scrutiny with the recent economic situation. As such, some cryptocurrencies' values have plummeted, and others have been “victims” of manipulation such as “pump-and-dumps” schemes. Most of these schemes are enabled through social media and other internet platforms. The U.S. Commodity Futures and Trading Commission (CFTC) is giving out rewards to whistleblowers for reporting pump-and-dump schemes that result in monetary sanctions and advising consumers of cryptocurrencies to be aware of such schemes. The CFTC charged John McAffee (now deceased) in March 2021 for conspiracy to commit commodities and securities fraud, wire fraud, wire fraud conspiracy, conspiracy to commit securities touting fraud, and money laundering including digital assets. McAffee used his Twitter account and “influencer” status to promote “various cryptocurrencies through false and misleading statements to conceal their true, self-interested motives.”
Crypto is legal tender. Regulations are sparse but growing.
Australia has taken a more or less “lassiez-faire” approach to cryptocurrencies by “allowing the landscape to evolve at a faster rate without significant regulatory limitation.” This approach has shifted recently with the election of Anthony Albanese. Albanese ran his campaign on three main issues, one of them being cryptocurrency regulations. Albanese's government is set to focus on creating a “regulatory bill focused on digital assets.” The new Australian government wishes to set measures to protect consumers while leaving room for growth and innovation in the crypto space.
Although it is not yet clear how Alabenese and his government plan to regulate the local crypto market, the Australian government has already taken measures to protect consumers against pump-and-dump schemes. Australian Securities & Investments Commission (ASIC) has noted a concerning trend of social media posts being used to coordinate ‘pump-and-dump’ activity in listed stocks, which may amount to market manipulation in breach of the Corporations Act 2001. The ASIC recently noted that they “are using social media platforms to directly engage with people involved in blatant pump-and-dump activity.
We have started using ASIC accounts on Telegram to post targeted messages in response to specific pump-and-dump commentary.”
Crypto treated as legal property.
Arguably, Japan is a leader in crypto regulations. In Japan, cryptocurrencies are considered legal property and taxed under the Payment Servies Act (PSA) and the National Tax Agency. Crypto exchanges are also obligated to “register and follow traditional AntiMoney Laundering/Combatting the Financing of Terrorism (AML/CFT)” regulations.
Japanese FCA includes cryptocurrency in prohibiting unfair acts of advertising, speculation, and rumors, or “Participating in collusive sales and purchases”.
Crypto treated as the national currency.
El Salvador recently made headlines by establishing the best-known crypto coin, Bitcoin, as a national currency. Alejandro Zelaya, Minister of Finance, defends the country's decision by claiming that the adoption of Bitcoin has “brought financial services to a largely unbanked population and attracted tourism and investment opportunities.” The Salvadorian government bought thousands of Bitcoins that are worth much less today due to the current economic situation that has impacted cryptocurrencies worldwide. This has not impeded Zelaya in praising the promises that the coin might have for the Salvoridan economy in the future.
The adoption of Bitcoin in El Salvador in 2021 jumped Bitcoin's price from $50k to nearly $53k in the late summer of 2021. Pump-and-dump schemes have been reported since. In particular online schemes, mostly on social media platforms, were campaigning for the solidarity of El Salvador's Bitcoin adoption by urging investors to dump funds into the coin.
Crypto not recognized as legal form of payment, yet.
Vietnam is one of the world's most active users in the crypto space despite its illegalities. The Vietnamese government does not yet recognize cryptocurrencies as legal forms of payment and has even gone as far as prohibiting their use as such. This, however, is rapidly changing as more and more Vietnamese citizens flock to selling, buying, and exchanging cryptocurrencies. In March 2022, the Vietnamese government introduced a legal framework for cryptocurrency that will allow for the "management of virtual assets, digital currencies, and virtual currencies."
Little data exist on pump-and-dump schemes surrounding the crypto market in Vietnam. The paradoxical intersections concerning the crypto space in the country make it an interesting case study on how cryptocurrencies are traded and, unfortunately, potentially manipulated. Special attention should be paid to the upcoming regulations and how potential pump-and-dump schemes could result from new regulations.
The crypto market is intrinsically tied to some of the most vulnerable and challenging aspects of our digital lives. The popularity of crypto is in part a result of evolving technologies that promise the decentralization of banking institutes. Unfortunately, with all such things, there are bound to be nefarious actors looking to take advantage. The information spaces where some cryptocurrencies are popular can and do fall victim to manipulation, mis- and disinformation, and more.
Understanding how the crypto market operates in some of these information spaces could potentially help researchers design relevant policies for organizations, governments, and more. LI: Crypto helps you understand these online spaces by combining artificial intelligence and the insights of expert analysts.
Article author: Pamela De La Rosa, Senior OSINT Analyst, Logically
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