Regulation Round-Up – March 2021

February was a relatively busy month for crypto regulations as the price of all major digital currencies soared to record levels. In total, the market capitalisation of all cryptocurrencies rose to more than $1.6 trillion before having a pullback in the final week of the month. As an agency specialising in financial marketing, our team has rounded up the top regulation changes in February, and now we’re looking at what’s coming up in March.

SEBI targets cryptocurrencies

In the past few years, India has become a leading player in the digital currency industry. However, like in most countries, it has not implemented many tight regulations. The country’s Securities and Exchange Board of India (SEBI) requested all promoters of Initial Coin Offerings (ICOs) to liquidate their crypto holdings. The agency has asked several bankers, securities lawyers, and executives that are involved in the process.

Analysts believe that these actions are just the beginning as the government mulls banning all cryptocurrencies. In a recent statement, the minister of finance said that all digital currencies, except those launched by the central government, will be illegal. This is in line with the “Cryptocurrency and Regulation of Official Digital Currency bill, 2021. Critics of the new bill argue that it will leave the country behind in the industry.

At the same time, the government is about to launch new taxes for the industry. The government has proposed an 18% Goods and Services Tax (GST) on all fees collected by exchanges on crypto trades.

Thailand focuses on crypto asset managers

In Thailand, the Thai Securities and Exchange Commission (TSEC) unveiled a set of regulations that target crypto asset managers. The regulations demand that any person managing these assets to apply for a license. These rules will also apply to crypto advisors. The new rules are a change from the past, when such managers and advisors were not being supervised by the regulator. The goal, according to the regulators, is to ensure that investors don’t lose money to unscrupulous managers.

ASIC reviewing Bitcoin ETFs

In a statement in February, a commissioner of the Australian Securities and Investment Commission (ASIC) said that the regulator was considering allowing Bitcoin ETFs. The announcement came a few days after the country’s National Stock Exchange (NSE) rejected a Bitcoin ETF by a company called Cosmos. An ETF is a good and cheaper option for investing in the underlying assets.

This progress came in the same period that a Bitcoin ETF launched in Canada. The ETF, known as the Purpose Bitcoin ETF, saw inflows soar to more than $400 million within two days.

SEC lawsuit against Ripple continues

In December, the Securities and Exchange Commission (SEC) filed a major lawsuit against Ripple, the founder of XRP. This suit led to a sharp decline of the XRP as many exchanges delisted the currency pending the outcome of the case. In February, the conflict between the two continued as Ripple hired Mary jo White, a former SEC commissioner as its lead counsel. Also, the SEC filed an amended complaint against the company with new details such as the fact that Ripple’s executives knew that XRP was a security.

FCA to regulate BNPL industry

The Buy Now Pay Later (BNPL) industry has had a lot of success lately. In Australia, AfterPay has become the biggest technology company there. In the United States, Affirm has been the biggest tech IPO this year. And in Europe, Klarna is one of the biggest fintech firms there. In the UK, the industry had more than 2.7 billion in transactions in 2020.

It is against this backdrop that the Financial Conduct Authority (FCA) announced that it will become the main regulator of the industry. In a statement, Christopher Woolard of the FCA said:

“Free debt advice services need secure, long-term funding as demand increases to as many as 1.5 million additional cases,  following the pandemic. Funding needs not be in place to help the poorest pay fees when applying for debt relief orders.”

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