Regulations Round-Up – December 2021

Cryptocurrencies had a relatively mixed month in November. Ethereum and Bitcoin surged to an all-time high during the month and then quickly retreated. Among the biggest winners were cryptocurrencies with gaming and NFT angle like The Sandbox, Decentraland and Gala. As an agency specialising in financial marketing, our team has rounded up the top regulation changes in November, and now we’re looking at what’s coming up in December 2021.

South Korea warns of market manipulation

Cryptocurrencies have done relatively well in South Korea. Some of the biggest companies in the industry like Terraform Labs are based in the country. Also, the number of South Koreans who have invested in cryptocurrencies has jumped substantially in the past few months.

In November, the Financial Services Commission (FSC) warned about market manipulation in the industry. This came a few weeks after the country’s parliament asked the regulator to come up with crypto regulations. The FSC recommended that culprits should get a minimum of 1 year in prison and fines three times the illicit gains. The minimum punishment for gains of 4 million will be a jail term of about 5 years.

The FSC has also recommended taxes on some assets like non-fungible tokens (NFT) and crypto gains over $2,100.

ASIC on crypto regulations

In Australia, the Australia Securities and Investment Commission (ASIC) warned that customers and crypto users were on their own for now. It also warned about the volatility and risks posed by cryptocurrencies and other blockchain-related products like NFTs and DeFi. At the same time, it reiterated that it was working with lawmakers to develop rules that will govern the industry. The chair also said that at present, some of the popular cryptocurrency products were not classified as financial products.

This announcement came a few weeks after the Commonwealth Bank of Australia (CBA) launched a platform to provide retail investors access to the industry.

US crypto regulations in the works

In the past few years, the US has silently grown to become the crypto capital of the world. Today, the country is home to most mining companies. At the same time, it is home to some of the biggest companies in the industry like Gemini, Coinbase, and Kraken. This growth has happened partly because the industry is relatively unregulated.

This could change in the coming year. In a statement in November, the Federal Reserve, Federal Deposit Insurance Corporation (FDIC) and the Office of Comptroller of Currency (OCC) said that they were developing regulations. Part of their goal is to come up with rules that banks can do when they hold cryptocurrencies. According to OCC, banks must ask permission from regional regulators before getting into the industry.

Analysts believe that clear rules about the industry will bring cryptocurrencies more mainstream. This is simply because many of the most influential banks in the US have not invested in the industry because of lack of clear rules. Some companies in the cryptocurrencies sector have feuded with regulators lately. For example, Coinbase was forced to end a yield product after the SEC protested. Similarly, the SEC has a long-running feud with Ripple Labs.

Stablecoin talks

Another industry that has been in the spotlight is stablecoins. These are cryptocurrencies that are backed by the US dollar. Some analysts have argued that the opaque nature of the providers pose systemic risks to the financial sector. This has led some experts to recommend that their owners should be insured by the FDIC. In November, a group of stablecoin providers like Circle and Figure Technologies held talks with regulators.

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