Global Outlook on Cryptocurrency Regulation: Financial Risks, Data Governance, and Cybersecurity Are Key Regulatory Focus Areas
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Global Outlook on Cryptocurrency Regulation: Financial Risks, Data Governance, and Cybersecurity Are Key Regulatory Focus Areas
This article will briefly explore the current cryptocurrency regulations and the expected legislative outlook for 2024 from a geographical perspective.
Navigating Web3 tides with focused insightsBy: Julius Mutunkei
Translation: TaxDAO
In the new year, regulatory pressure in the cryptocurrency sector is expected to surge. These regulations will expand to cover anti-money laundering and counter-terrorism financing risks, the conduct of companies operating in the crypto space, and regulatory actions related to token offerings.
In the United States, there are no signs of slowing down in regulatory activity. Similarly, the UK has introduced rules equating the sale of crypto tokens with that of traditional financial products. Meanwhile, the European Union is set to become the first major jurisdiction in 2024 to formally enact a comprehensive suite of laws and regulations for the cryptocurrency industry. The Markets in Crypto-Assets Regulation (MiCA) aims to establish a unified EU crypto regulatory framework and provide legal certainty for digital assets currently outside the scope of existing EU financial services legislation.
Overall, analysts expect key focus areas in 2024 to go beyond just increased regulation. They predict that financial institutions will develop stronger risk management frameworks and raise capital and liquidity requirements to reflect current economic conditions. Additionally, the growing importance of data and artificial intelligence in both traditional finance and cryptocurrency is expected to increase global demand for data governance and model risk management within crypto regulation. Analysts also anticipate sustainability and environmental, social, and governance (ESG) factors will play a larger role in international crypto regulation, while cybersecurity remains paramount as digital asset platforms continue to be targets for hackers and scammers.
Let’s briefly explore the current state of cryptocurrency regulations and anticipated legislative developments in 2024 from a geographical perspective.
U.S. Cryptocurrency Regulation
Cryptocurrency regulation in the U.S. combines state and federal oversight, allowing multiple agencies to participate in governing the industry. Agencies such as the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) largely rely on existing legal structures to regulate digital asset activities.
In 2023, the SEC and CFTC initiated over 200 enforcement actions against cryptocurrency firms. This heightened regulatory activity comes amid widespread bankruptcies, fraud, illicit operations, and illegal fund flows across the industry.
As 2023 ended, some participants in the crypto space criticized regulators—particularly the SEC—for their approach to overseeing the industry. There were renewed calls for policymakers and regulators to clarify crypto laws and adopt a more comprehensive rulemaking process.
However, these requests were largely ignored. By year-end, the SEC suffered several legal setbacks, notably in cases against Ripple (XRP) and Grayscale. Still, it had the last laugh. On December 15, the regulator rejected Coinbase’s petition to create new rules for the cryptocurrency industry.
Anton Titov, CEO of fiat-to-crypto payment processor Archway Finance, told crypto.news he viewed the SEC's decision as reasonable. As he explained, the agency’s mandate is to protect investors, uphold market integrity, and promote capital formation. Thus, rejecting Coinbase’s petition aligned fully with investor interests. “Because most people engaging with cryptocurrency this year and next do so purely for speculative purposes. Even utility tokens equate speculation with profit-seeking, which equals investment. Therefore, the SEC’s actions are entirely in investors’ best interests and aim to preserve market integrity.”
Nevertheless, Titov noted that the decision also highlighted the SEC’s reluctance to fully embrace cryptocurrencies. He believes the agency sees Bitcoin and stablecoins as threats to established and controllable monetary flows. Moreover, in his view, U.S. regulators are not positioned to serve as an "innovation hub" for emerging technologies like blockchain and digital tokens, indicating a fundamental misalignment between its mission and the goals of the crypto industry.
However, the rapidly expanding market size of certain cryptocurrencies—especially USD-backed stablecoins surpassing the $50 billion threshold for systemic importance—has drawn attention from U.S. lawmakers, prompting them to draft additional legislative proposals to regulate crypto activities.
One such proposal is the bipartisan Responsible Financial Innovation Act (RFIA), which seeks to classify most digital assets as commodities. It would assign primary oversight authority to the CFTC and establish regulatory requirements for stablecoins.
The Biden administration also issued an executive order outlining the U.S. government’s approach to cryptocurrency regulation. Furthermore, a bill passed by Congress in 2021 requiring new reporting obligations for individuals involved in large-scale cryptocurrency transactions took effect in January 2024.
According to the cryptocurrency advocacy group CoinCenter, the Infrastructure Investment and Jobs Act mandates any entity receiving $10,000 or more in cryptocurrency during ordinary business operations to report the transaction to the IRS. Failure to report within 15 days after the transaction could result in felony charges. The legislation is self-executing, meaning no additional regulatory action or implementation by any government agency is required. Once signed into law, it becomes immediately enforceable. Consequently, all U.S. citizens handling cryptocurrency are now subject to this law.
Looking ahead to 2024, many predict that efforts to pass cryptocurrency legislation in the U.S. will center on two bills: one seeking federal-level stablecoin regulation, and another proposing a holistic market structure approach for the entire crypto industry.
The Clairity for Payment Stablecoins Act, introduced by House Financial Services Committee Chairman Patrick McHenry, may be among the first legislative items addressed in 2024. Although the bill cleared committee review in July, concerns remain—particularly from the White House and influential Democrats—about provisions allowing regulators to approve stablecoin issuances without Federal Reserve involvement. SEC Chair Gary Gensler compared stablecoins to money market funds and suggested dollar-pegged versions should fall under his agency’s jurisdiction, a stance observers believe could hinder the bill’s passage.
A second bill, the Financial Innovation and Technology for the 21st Century Act, may also face challenges as it proposes shifting greater oversight responsibility to the CFTC and requires regulators to define a clear pathway for digital assets transitioning from securities to commodities.
Additionally, potential approval of spot Bitcoin ETFs could enhance legitimacy in the crypto industry. Several asset managers—including BlackRock, Fidelity, and WisdomTree—are vying for spot Bitcoin ETF approvals pending SEC authorization, which has not yet been granted.
Finally, the 2024 elections may significantly impact digital asset legislation, as lawmakers shift focus from crypto regulation to re-election campaigns.
UK Cryptocurrency Regulation
Since 2020, UK law has required cryptocurrency firms to register with the Financial Conduct Authority (FCA) and comply with the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017.
However, in October 2022, as part of a broader government strategy aimed at making the UK a global hub for crypto technology and investment—and enabling regulators to respond faster to sector developments—the House of Commons voted to allow the Treasury to regulate cryptoassets as financial instruments under the Financial Services and Markets Act 2000.
Additionally, the government released a consultation paper in early 2023 seeking input on how to regulate the crypto industry. Following this process, Whitehall indicated plans to place various digital assets—including utility tokens and exchange tokens without backing—under regulatory frameworks similar to those governing traditional financial assets.
Rules governing crypto advertising and sales in the UK are also changing, with the Treasury integrating crypto promotions into existing financial promotion rules. Moreover, the FCA has imposed further restrictions on the sale, marketing, and distribution of crypto derivatives (excluding security tokens).
Furthermore, as in the U.S., stablecoins are expected to face stricter regulatory scrutiny in the UK. The government intends to recognize them as a legitimate form of payment. Observers predict this can largely be achieved by extending existing e-money and payment legislation.
Nathan Catania, partner at XReg, told crypto.news that the UK’s approach to stablecoin regulation will play a crucial role in shaping the country’s financial future. Catania emphasized proactive measures taken by the UK to address key regulatory risks, stating the nation is ensuring issuers maintain low-risk, liquid, and secure reserve assets. “Overall, major regulatory risks have been addressed. This includes ensuring issuers hold reserves composed of low-risk, liquid, and secure instruments. Safeguards around customer asset protection and other prudential requirements will make UK-issued stablecoins safer for consumers to use.”
However, Catania also identified potential obstacles regarding overseas approaches to stablecoin regulation. Most stablecoin activity in the UK involves foreign-issued assets, particularly Tether (USDT) and USD Coin (USDC). He noted that even entering 2024, the impact of the regulatory framework on the listing and trading of these stablecoins on UK crypto exchanges remains unclear.
Moreover, the analyst expressed concern that the stablecoin regime might fail to extend into peer-to-peer payments. He believes this could affect UK crypto markets and exchanges, potentially limiting consumer choice even while protecting consumer interests. Hence, he argues the UK must strike a careful balance when shaping future crypto legislation.
European Cryptocurrency Regulation
With the implementation of MiCA, Europe’s cryptocurrency legislative landscape has made significant strides. This regulatory framework represents the first attempt to harmonize cross-jurisdictional oversight of digital assets and related activities across the EU. MiCA is a cornerstone of the European Commission’s broader strategy to integrate cryptocurrency and blockchain technology into the financial services industry. It forms the foundation of EU crypto regulation, aiming to align disparate national laws while striking a delicate balance between encouraging financial innovation and mitigating unique risks posed by various digital assets.
By 2024, crypto-asset service providers (CASP) and crypto-asset issuers (CAI) operating within or across the EU will be required to follow a unified rulebook, replacing previously fragmented national frameworks.
As the European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA) finalize Regulatory Technical Standards (RTS), Implementing Technical Standards (ITS), and guidelines, the application of MiCA is expected to become further refined in the coming year. Meanwhile, EU member states will deploy their own legislative tools to support the rollout of MiCAR, RTS, ITS, and guidance.
The outlook for Europe in 2024 is that National Competent Authorities (NCAs) in EU member states will intensify efforts to provide regulatory guidance and expectations regarding authorization and supervision of CASPs, CAIs, and traditional financial service providers engaging in MiCAR-regulated activities.
Asian Cryptocurrency Regulation
While China completely banned cryptocurrency usage in 2021, several neighboring countries have taken steps to embrace the industry, shifting the regional regulatory landscape toward consumer protection and transparency.
Singapore led the trend in 2023, with the Monetary Authority of Singapore (MAS) announcing new rules aimed at protecting individual traders, set to take effect mid-2024. These include restricting credit access for crypto trading, banning incentives that encourage trading, and prohibiting the use of locally issued credit cards to purchase cryptocurrencies.
Meanwhile, Hong Kong has adopted a more liberal stance, welcoming crypto firms and launching its own licensing regime for the industry. Through a comprehensive regulatory framework, Hong Kong aims to position itself as a global virtual asset hub, with further developments expected in 2024. Currently, Hong Kong regulators classify crypto tokens into security tokens and utility tokens, with the former falling under the jurisdiction of the Securities and Futures Commission (SFC).
Japan has been laying the groundwork for growth in the crypto economy, even viewing web3 as a key pillar of its economic roadmap. From a regulatory standpoint, Japan categorizes digital assets into several types: crypto assets, stablecoins, security tokens, and others such as NFTs, each governed by different legislation. Holding and selling cryptocurrencies are regulated under the Payment Services Act (PSA), which does not impose specific prudential requirements on digital assets. However, service providers must safeguard a certain proportion of customer funds using highly secure methods, such as cold wallets. Amendments to the PSA in June 2023 further clarified the status of fiat-denominated stablecoins, distinguishing them from other digital assets. Currently, regulations restrict stablecoin issuers to banks, money transfer operators, and trust companies, while intermediaries must register with regulators and adhere to strict AML/KYC standards.
Outlooks for 2024 suggest continued growth in the crypto sector as regulations strengthen and bring greater clarity, creating a safer and more conducive environment for crypto-related activities.
Global Cryptocurrency Regulation
Other regions globally are not lagging in cryptocurrency legislation. PwC’s 2024 Global Crypto Regulatory Review identifies over 40 jurisdictions with some form of crypto regulations.
Among national crypto regulations, only the Bahamas, Cayman Islands, Japan, Mauritius, Singapore, and the United Arab Emirates have comprehensive crypto legislation covering licensing, registration, travel rules, and stablecoin treatment—outside the EU.
Many other countries are still developing frameworks to enter the crypto regulatory landscape, with Qatar, South Africa, Taiwan, and Canada engaged in varying degrees of ongoing regulatory activity, including discussions, consultations, and pending implementations of crypto laws.
Elsewhere, Australia has actively developed a regulatory framework for the crypto industry. As part of a multi-phase reform agenda, the Australian government released a token mapping consultation paper in February, laying the groundwork for subsequent regulatory measures.
Beyond Australia, the UAE has made significant progress in crypto regulation, becoming one of the first jurisdictions with comprehensive crypto laws. Given the rapid expansion of the virtual asset ecosystem, the UAE government has delegated regulatory authority to the Securities and Commodities Authority (SCA) and the Central Bank (CBUAE), fostering an environment conducive to crypto industry development.
Meanwhile, New Zealand has taken a more cautious approach, focusing on how existing regulations apply to cryptocurrencies and crypto service providers before introducing new, specific legislation.
The New Zealand government acknowledges the crypto industry is still in its infancy and emphasizes the importance of adaptive rules that can evolve alongside the industry and align with global crypto regulation.
On the other hand, South Africa is charting its course in crypto regulation. Local observers say the country is keen to learn from experiences and models of other jurisdictions—including those beyond Europe and the U.S.—as it seeks to understand the complexities associated with crypto regulation.
Expert Outlook
This "crypto regulatory map" highlights the global trend toward tailored regulatory measures for the cryptocurrency industry.
Upcoming crypto regulations are expected to further refine and strengthen these measures, fostering a more robust and sustainable crypto market where innovation can thrive under regulatory oversight.
Industry analyst Anton Titov, sharing his 2024 outlook, predicts MiCAR will be implemented across the EU, resulting in uniform anti-money laundering policies in all member states. He also believes non-EU countries such as the UK, Switzerland, and the U.S. may align with these standards. Beyond the EU and the U.S., he forecasts a shift in how the rest of the world views cryptocurrency. He anticipates Indonesia’s potential new president may adopt a more open stance toward crypto, and India may welcome more foreign companies into its local market. This would involve establishing frameworks consistent with banking policies to guide domestic and cross-border investments and trading. However, he also expects privacy on blockchains to remain prohibited and negatively perceived, even in commercial transactions. Nonetheless, he believes the emergence of the first central bank digital currencies (CBDCs)—though falling short of Satoshi Nakamoto’s vision of financial sovereignty—will send a strong signal of blockchain’s inevitability and regulatory acceptance.
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